Political intrusion costing African airlines

Friday November 24 2017

Industry players say the high taxes imposed on African airlines are partly responsible for driving up ticket prices, making flights in the continent the most expensive in the world. PHOTO | CYRIL DEGEYA | NMG


Players in the African airline industry have decried interference from governments which they say affects their commercial operations and leads to losses.

Of great concern is the tendency of imposing political appointments into managerial positions, which puts the airlines’ operations in the hands of unqualified people.

Speaking at the recent African Airlines Association general assembly in Kigali, Tefera Mekonnen, the director of air transport at the African Civil Aviation Commission said “political interference has led to the demise of some airlines.”

It has also distorted the commercial fortunes of airlines in Africa, which he says partly explains why many are unprofitable at a time when traffic is growing. Scheduled domestic passenger numbers carried for all African airlines increased by 3.4 per cent in 2016 to 32.29 million people.

Raphael Kuuchi, the vice-president of the International Air Transport Association (IATA), said political interference of airline operations in Africa in most cases takes a restrictive form and in some cases, is localised.

“Sometimes there are military operations and air spaces are blocked,” said Mr Kuuchi.


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He said airlines have sometimes been forced to fly high altitudes due to fears of being hit by missiles especially in war prone countries, or to fly around an area, which increases operational costs for airlines due to high jet fuel consumption.

Mr Kuuchi also said some governments keep raising taxes on airlines, which they say are already high.

Analysts say many African governments see the airline industry as a cash cow hence the increasing taxes.
For example, Senegal charges over $100 in taxes per passenger while Nigeria charges $60 per passenger.

Industry players claim the high taxes imposed on African airlines are responsible for driving up ticket prices making African flights the most expensive in the world.

Other experts who follow the trends in the industry counter this argument and say that airlines are internally inefficient leading to high ticket prices, which lock many people out of air travel.

Some are struggling despite separating fuel prices, which passengers pay for separately from the ticket price.

Precision air recently resumed its Dar es Salaam-Kampala route after halting it for some time. One of the reasons they cited for the route suspension was the high taxes levied.

Both countries levied a total of $106, Uganda charging $57, Tanzania $49 while the carrier imposed $100 in fuel surcharges, which saw an economy class ticket costing between $300 and $400.
Despite high ticket prices, South African Airways has continued to post losses.

On the other hand, Ethiopian airlines which charges affordable fairs and operates some of the thinnest routes on the continent is profitable.

The largest African airline by fleet size spent $2.55 billion on operating costs but netted a profit of $272.4 million in 2016.

The 16 African Airlines Association carriers had a total operating revenue of $9.24 billion against an operating cost of $9.16 billion in 2016, resulting in a net loss of $54.25 million, according to data from the 2017 AFRAA annual report. Of the 16 carriers only five reported a net profit.

African governments were challenged to provide a conducive environment for airline operations and to look at the bigger economic gains that can come from airline business as opposed to the quick gains from heavy taxes.

They were also urged to revise tax policies for the airline industry in order for the sector to realise its full potential and give its contribution to economic development.

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