Transport Ministry backs proposal to increase domestic airport tax

Deputy Minister for Transport, Hassan Tampuli, says his outfit will back the proposal by the Ghana Airports Company Limited for an upward review of the Domestic Airport Passenger Service Charge (APSC).

He noted that the infrastructure developments being undertaken at the regional airports were enough justification for pursuing the review, so that Kotoka International Airport (KIA) is relieved of the burden of subsidising the operations of regional airports in Ghana.

He made these comments at the 8th Annual General Meeting of GACL held at Kotoka International Airport.

For 2022, the GH¢5 charged to each domestic passenger for the use of on-ground aviation infrastructure, yielded just under GH¢4.3 million.

The amount, which translates into a little under GH¢360,000 per month, remains inadequate in the maintenance of Kumasi, Sunyani, Wa, Ho, Tamale airports and Terminal 2 of the Kotoka International Airport in Accra used for domestic operations.

Typically, for the existing regional airport such as the Tamale Airport, the major expenditure lines—electricity and water supply, maintenance of lighting equipment, air conditioning, janitorial services, waste disposal, maintenance of the terminal building, and other overhead costs —is close to a million cedis per month. Hence the proposal by GACL for a review.

While an upward review has largely been endorsed by aviation analysts, the margin of increase is not firmed yet.

Sean Mendis, CEO of Seanmendis.com, told AviationGhana that said the proposed increment is long-overdue and it is the surest way for the GACL to operate and maintain various airports in the country.

“Airlines have been lobbying for an increase in the domestic APSC for GACL for years. Increase GH¢5 to GH¢10 and it is a tiny fraction of the ticket price, but it’s a doubling of their operations budget. As long as they use the funds to actually support the airport operations, it is a good thing,” he said.

Mr. Hassan Tampuli, commended the Board and Management of Ghana Airports Company Limited (GACL) for gradually steering the company out of the financial challenges brought about by the COVID-19 pandemic.

Mr. Tampuli, who represented the Minister for Transport, Kwaku Ofori Asiamah, said the Ministry had made several interventions to ensure a viable aviation sub-sector.

He further touched on measures instituted by the Vice President of the Republic, Dr Mahamadu Bawumia in collaboration with the Economic Management team to streamline the Departure and Arrival Facilitation Processes to improve KIA’s competitiveness in the sub-region.

2021 Annual Report

Presenting the 2021 Annual Report, the Board Chairman, Mr Paul Adom-Otchere, citing statistics from the International Civil Aviation Organization (ICAO), disclosed that Global Passenger Traffic recovered modestly in 2021, with the ICAO impact analysis of COVID-19 on Civil Aviation revealing that the number of passengers worldwide was 2.3 billion or 49 percent below pre-pandemic (2019) levels, up from the 60% drop witnessed in 2020.

He stated that ICAO further reported a decrease in the rate of global air traffic recovery in the first quarter of 2021 due to the sharp spike of COVID-19 infection.

The situation stabilized slightly in the second and third quarter mainly due to rising vaccination rates and the lifting of travel restrictions in various parts of the world during the peak travel season. However, this upward trend stalled quickly in the fourth quarter with the emergence of the Omicron variant.

Paul Adom-Otchere indicated that in Ghana, Air Traffic Movements in 2021 exceeded that of 2020 by 50.4% after the Government of Ghana eased travel restrictions and reopened the country’s borders for flight operations in 2021.

Air traffic movements for both international and domestic showed strong growth with international growing at 53.9% and domestic growing at 46.1%.

He touched on the Industrial Relations climate indicating that it had remained relatively calm and peaceful as a result of deliberate and proactive steps taken by Management to resolve staff-related challenges.

Addressing the 8th Annual General Meeting (AGM) of the company, Managing Director of GACL, Mrs. Pamela Djamson-Tettey, commended staff for their resilience and exemplary workmanship throughout the business recovery process following the overwhelming and unparalleled effect of COVID-19 and the ensuing travel restrictions on airports.

She gave an overview of the Air Traffic Performance attributing the leap in variance for Air Traffic Movements for both International and Domestic, to the impressive growth in charters especially cargo flights during the pandemic, increased flight frequency by domestic airlines and flight operations on the Accra-Ho-Accra and Accra-Wa-Accra routes within the year.

On the Financial Performance of the company, she indicated that a loss of about GH¢252 million was posted for the year under review ending 31st December 2021. This was an improved performance compared to the loss of GH¢435.5 million in 2020. The underlying factor, she said, was a significant increase in financial cost for the Term Loan Facility for the construction of Terminal 3 at KIA.

GACL to focus on new revenue-generating initiatives

On the business outlook for GACL, she said the company will transform its revenue generating capacity by focusing on implementing and leveraging new Business Development Initiatives as well as strategies for the growth and diversification of Non-Aeronautical Revenues.

“The Company will focus on implementing new Business Development Initiatives, strategies for the growth and diversification of Non-Aeronautical Revenues in line with its corporate objectives. In that regard, the proposed Airport City 2 Project would feature largely in the Company’s efforts to enhance its Non-Aeronautical Revenue Base in the coming years. It is expected that this approach will produce tangible results and transform the revenue generating capacity of the Company and drive the vision to make Kotoka International Airport a true hub and leader in the Airport Business in West Africa”, she said.

The Audit Service on its part, opined that the Annual Report gave a true and fair reflection of the financial position of the company as at 31st December 2021.

Present at the event were the Deputy Minister for Transport, Fredrick Adom, Board Members of GACL, Management and Stakeholders from the Ministry of Finance, State Interests and Governance Authority (SIGA) and the Ghana Audit Service.