East Africa countries to cut flight cost by half

By KABONA ESIARA, TEA Special Correspondent

Transport ministers from the region have agreed on new tax East Africa countries to cut flight tickets by halfmeasures that are expected to bring down the cost of air travel and attract more investments in the aviation industry.

The ministers from South Sudan, Uganda, Kenya and Rwanda who met in Kigali recently suggested that Value Added Tax (VAT) and other taxes airlines pay be scrapped, saying that they add to the high costs of air travel. VAT in the region ranges between 16 and 18 per cent.

If the Heads of State Summit slated to take place next week adopts the resolutions passed by the ministers, it is hoped that air travel costs could come down by more than 50 per cent, making it affordable for the majority of travellers in the region. Currently, air travel is a preserve of the privileged few.

It was noted that in the case where travellers are to connect from one city to another, most end up using road transport which takes longer and is tiresome.

For example, passengers spend nine hours on the Kigali-Kampala route by road compared with 45 minutes by air.

“I would rather spend $14 on a bus to Kampala than over $435 by air to Entebbe,” said Denis Mugabo a businessman in Kigali.

The transport ministers also agreed to encourage more low cost airlines to operate between major cities, operationalise the fair competition law, implement the double taxation agreement and enforce the open air space policy as per the 1999 Yamoussoukro Decision — which outlines measures regarding the liberalisation of air transport markets in Africa.

But analysts also noted that the high aviation fuel costs, airport charges and other taxes are partly responsible for the expensive air travel, a challenge that the governments of Uganda, Kenya, Rwanda and South Sudan must address under the regional initiative to fast track infrastructure development — Northern Corridor Integration Projects.

Clare Akamanzi, the chief operating officer of the Rwanda Development Board, a body charged with attracting the private sector in the country suggested that the Northern Corridor countries should also invest jointly in a jet fuel storage facility.

“This will ensure bulk purchases of fuel which come with economies of scale making it more affordable,” said Ms Akamanzi.

Airlines complain that high fuel costs especially in land locked Uganda and Rwanda add to the high operational costs.

Kenya’s Transport Secretary Michael Kamau said should the Heads of State Summit ratify the proposed measures, then air transport in the region will become affordable.

Stephen Chebrot, Uganda’s State Minister for Transport concurred.

http://www.theeastafrican.co.ke/business/Plans-to-cut-flight-costs-in-East-Africa-by-half-/-/2560/2467032/-/item/1/-/6a8bno/-/index.html

 

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Edition 79October 2014

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