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Domestic passenger throughput increases

May 31, 2017, 5:11 p.m.

Domestic passenger throughput from Accra to the four major domestic destinations in the country--Takoradi, Kumasi, Sunyani, Tamale—have increased significantly, data from the Ghana Airports Company has shown.

Domestic passenger throughput for the first quarter of 2017, has increased by 33 percent over the same period last year; increasing from 88,793 in Q1 2016 to 118,159 as at Q1 2017.

The significant increase in passenger volumes, at a period that is usually characterized by low yield in the country’s domestic aviation sector, has been attributed to the surge in economic activity since the Nana Addo Dankwa Akufo-Addo-led government assumed power on the back of promises to cut some taxes it described as ‘nuisance’.

Government’s proposed initiative of establishing a factory in each of the 216 districts in the country has also attracted a lot of potential investors into the country who are scouting the various regions for viable projects.

These investors travel from the Domestic Terminal in Accra to either Takoradi, Kumasi, Sunyani and Tamale for business.

The Ministry of Trade and Industry has so far received 150 proposals from both foreign and local investors keen on partnering government in its proposed plans to establish a factory in each of the 216 districts in the country.

The Trade and Industry Ministry envisages the cost of each project to range between US$1million and US$5million.

Domestic passenger throughput is further projected to further increase in the second quarter of this year, following the removal of the 17.5 percent Value Added Tax (VAT) on domestic airfares in March.

The Finance Minister, Ken Ofori-Atta, announced the abolishing of the 17.5 percent VAT on domestic airfares in the 2017 budget passed by Parliament and subsequent passage of the Value-Added Tax (Amendment) Bill.

Government is expected to take a GH¢21.11million hit in relation to the abolishing of the VAT on domestic air transport, as it seeks to further grow the industry.

Accra-Kumasi one-way ticket, for instance, has dropped from about GH¢320 to about GH¢265 on both Starbow and Africa World Airlines (AWA).

Ticket prices are expected to further fall after an up-coming meeting between the Aviation Minister, Ms. Cecilia Dapaah, and domestic airline operators to explain how airlines can also benefit from the removal of duty on imported parts—a major cost component for operators that has a bearing on the cost of airfares.

Mr. Eric Antwi, CEO, Starbow, told the B&FT in an earlier interview that: “The removal of the VAT will lead to a fall in airfares. When something is also done about the duty on spare parts, ticket prices will drop further.”