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Monday 25 September 2017
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Domestic airfares drop as VAT slash takes effect

City Link prepares return to the skies

Ghana air, Africaworld airlines

By Joseph Ojumu

 

Domestic airline operators in Ghana have moved to reduce their airfares following the passing of the appropriation bill by parliament.

The bill which was passed on Friday saw parliament scrap the 17.5% VAT on domestic air ticket fares even as it gave approval to the basket of tax cuts announced by Finance Minister, Ken Ofori-Atta during the 2017 budget presentation.

The 17.5 percent VAT on domestic air tickets was among the eight taxes scrapped by the NPP government to bring respite to businesses.

Following this development, the base fare for a trip from Accra to Kumasi for instance which hitherto cost GH¢315 has been reduced to GH¢269.

On the heels of that development, patrons of local airlines were officially expected from Saturday, 1st April 2017, enjoy 17.5 percent slash on air tickets they purchase with the passage of the Appropriation Bill by Parliament, according to Aviation Minister, Cecilia Abena Dapaah.

Chief Operating Officer of Africa World Airlines (AWA), Captain Samuel Thompson confirmed that the cuts have been implemented.

“According to the appropriation Bill passed last Friday, we have removed the 17.5% VAT off the domestic airfare. Even though we have a basic fare, depending on what class you get, your ticket in the fare might go up. Depending on the distance as well. The base fare we had was Gh¢315; it is now going to be Gh¢269. This is for the Accra-Kumasi flight. So if anyone is purchasing a ticket today the person will definitely get a reduction.” he confirmed.

And in a related development, one of three local airline companies that had been grounded for some time now, City Link, has initiated processes for a comeback at least within the short to medium term.

This is the indication from the Director General of the Ghana Civil Aviation Authority, Simon Allotey.

According to him, the airline company in February 2017 renewed its air carrier license after five years of inactivity.

“City Link has recently renewed its air carrier license we are waiting a request from them for the commencement of their operations. I think they are re-organising and soon they will commence operations,” the DG boss stated.

The air carrier license is among other things an indication of the economic and financial strength and capability to operate as an airline.

The renewal of the license is expected to be followed by the company’s assets and operational strategy.

City Link is among three local airlines that have suspended their operations for varied reasons.

Allotey could however not indicate the time period of resumption of activity.

He however explained that the activities involved require a relatively longer period which might not be completely determined by the Authority.

“It depends on the airline itself because they will have to lease an aircraft and it is also tied to their finances. I cannot tell what their financial arrangements are. Once they are able to arrange for a few aircrafts they can commence operations.”

“It is difficult to give a specific timeline that it will take CTK a month, two or three; it all depends on how they go about their arrangements and some of these contracts can be lengthy.”

Meanwhile the GCAA is highly optimistic a comeback by City Link should intensify competition in the local aviation industry.

Resumption of the three local airlines that went under has been rescheduled for quite a number of times.

The three; Antrak Air, City Link, Fly540Gh all suspended their activities between 2012 and 2015 for varied reasons.

Currently only two local airline companies are in operation.

They are Africa World Airlines and Starbow Airlines.

 

 

 

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