Fiscal challenges and the high cost of aviation fuel prior to its reduction last week has negatively impacted on Domestic Passenger Movements in the country.
Figures released by the Ministry of Transport indicate that the sub-sector suffered some setback showing a decline, recording 195,447 domestic travel from January to June 2016, compared to 288,968 domestic travels under the same period in 2015.
Speaking at a press conference in Accra, the Minister for Transport, Fifi Kwetey stated that the Transport Ministry is working with the Ministry of Finance to remove VAT on aviation fuel to help cut down airfare tickets.
“The reduction in the domestic passenger movement largely is a combination of the difficulties in the increase in aviation fuel cost last year and also the fiscal issues that brought about introduction of VAT,” he explained. He stated that government is committed to reducing the cost of airfare tickets to boost the domestic aviation.
“In terms of the aviation fuel you heard a good announcement that reduced it by 20 percent. We are talking to the Ministry of Finance as well in order to see an elimination of the VAT,” he assured.
According to him, government’s decision to reduce the tax by 20 percent was aimed at making Ghana an aviation hub for refueling by airlines. “The main reason why the cost was reduced by 20 percent is not just targeted at the domestic airlines but to make Ghana a destination for airlines to refuel.
Before the reduction, Emirate for instance makes a stop here in Kotoka but always go to Abidjan to refuel”. He disclosed that the ministry is already picking signals of an improvement after the tax was reduced.
New data in aviation industry
On international passenger movements, Ghana recorded an improvement with 837,019 from January to June 2016 as against 754,553 in 2015 under the same period.
International aircraft movements also saw an increase from 11,181 to 12,147 in the same period under review. Freight also saw an increase from 24,002 tonnes in the first six months 2015 to 22,550 tonnes in 2016.
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