Taxes and fees are the bane of African airlines say industry executives at AFRAA meeting


(Posted 29th November 2013)

When addressing the assembled aviation community from across Africa earlier this week at the AFRAA 45th Annual General Assembly, did IATA Director General and CEO Tony Tyler not mince words when outlining some of the key obstacles African airlines face in doing business.

He in particular laid into the Kenyan government, which while professing to be business friendly in fact has taken outright hostile action against the aviation community when slapping a 1.5 percent rail levy on the aviation fuels imported into Kenya. The IATA Director General was quoted by several sources, including the Kenyan media, to have said verbatim: ‘The latest example of a misguided charge is right here in Kenya. The new rail levy tax applied on jet fuel for international flights adds an estimated US $13 million to airlines’ fuel bills every year. The VAT applied on the KPC pipeline from Mombasa to Nairobi is another example that directly affects airline costs. Global standards and recommended practices for fees and taxes also exist, particularly with regards to fuel for international flights and infrastructure charges. Unfortunately, many governments in Africa ignore them, treating aviation as a luxury rather than as a vital enabler of development’.

There was predictably no response from any government body or spokesperson to this broadside, nor is there any response in fact expected as the Kenyatta government has not exactly shown itself available and ready for open dialogue with the business community over the many issues raised vis a vis for instance the VAT act. There, as said by the IATA CEO as well as by many individuals in the tourism industry, the sector is now facing a downward spiral of less tourists in the face of sharply risen cost to which government showed not just intransigence but outright deafness to the outcries of the country’s tourism gurus.

How can we as airlines be expected to finance a transport competitor through a levy I wonder. Is there a levy anywhere in place to finance aviation in Kenya? This is the most ludicrous decision the Kenyatta government has taken and there were a few as you keep outlining in your articles’ wrote a regular aviation source in the context of this article and the comments made by Tyler while in Kenya.

The Chief Executives of Ethiopian Airlines and of South African Airways too hit out against the taxation policies of African governments resulting in 25 percent higher fuel cost compared to other parts of the world, while others decried the level of regulatory fees and taxes on tickets which often more than doubled the base fare given by airlines when it comes to paying a ticket. Meanwhile though are foreign competitors, in particular Gulf airlines, taking full advantage of their lower taxation base to siphon off more and more traffic share from African airlines, and by the consensus of delegates present at the AFRAA meeting, not just over the level of services but largely over the price of their tickets which are by and large free of taxes African airlines have to pass on to travelers.

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