More charges,taxes and fees in the air transport industry in Africa a big challenge to AfCFTA
According to World Travel and Tourism Council, the global travel and tourism sector generated 10.4% of all global activities in 2018, contributing 8.8 trillion US dollars to the global economy and supporting 319 million jobs. More specifically, the Airline industry carried 4 billion passengers and 64 million tons of cargo across the world on around 22,000 routes in 2018 and generated 30 billion Us Dollar of net post tax profit. Out of the 1.4 billion tourists that crossed international boarders, 55% traveled by air.
The high dependency between air transport and tourism and their mutual importance for economic growth make necessary to take action in order to make these sectors efficient.
According to UNWTO, 67 million international tourists visited Africa, bringing in a total receipt of USD 38 billion in 2018. The contribution of travel and tourism in the global GDP is around USD 81 billion, which is greater than automotive manufacturing, health and banking, showing the importance of this sector for African Economy. Tourists travel by air to and from Africa.
Traders undertake their long-distance journeys by air. Intra-Africa trade is exceptionally low (15.2% for the period 2015 -2017, compare to 50% and 64% within Asia and Europe respectively). Air transport will be vital in the implementation of AfCTA to develop trade among African States. Unfortunately, air transport industry is still non-profitable in the continent; most African citizens cannot afford passenger air ticket. African airlines face several challenges, including the high level of taxes, fees and charges. In fact, air transport is perceived as luxury service across the continent.
As it is luxury for africans it will have a negative impact on the free movement of people as well as the creation of African Continental Free Trade Area.
Then, governments, airports and service providers tend to overcharge airlines; despite many of them are struggling to survive. However, efficiency gains in the air transport industry will accelerate the development of tourism, trades and other key economic sectors in Africa.
In Africa, there is no common policy in terms of Air navigation service charges. Service Providers apply different rates from a country to another, except for ASECNA whose formulas are common for 17 member states in western and central Africa, and in Indian Ocean. The aviation industry has a particular fiscal regime. According to ICAO regulations, fuel, which represents at least 24.7% (IATA WATS 2019) of African airlines’ operational costs, should not be taxable. However, many other specific taxes and fees are applied to passengers.
There have been a series of requests to undertake deeper analysis of the existing Taxes, Fees and Charges (TFCs), the consumer, passenger or traveler pays in a flight ticket traveling within Africa. By examining the exact number of Taxes, Fees and Charges, amounts, types, appellation, origins and the impact of these taxes, fees and charges to the air transport industry in Africa.
According to African Airlines Association (AFRAA) report released in 2020, revelaed that in Central and Western Africa, 10 out of 23 airports, which is almost half, charge more than USD 100. Thus, the two regions represent only 20% of the global traffic to/from Africa. Most of Northern African airports which represent 35% of the traffic, charge less than 50 USD.
Central and Western African airports have the highest passenger taxes and fees, which vary from USD 164.9 in Niamey to USD 17.1 in Ilha Do Sal. The five (5) most expensive in western African charge above USD 100. Passengers in North African airports enjoy the lowest amounts. Cairo charges USD 67 as passenger taxes and fees, while Khartoum charges only USD 8.2.
35 airports out of 53 apply taxes and fees on transfer passengers, increasing ticket price by an average amount of USD 36.02,This will go hand in hand with the incresing of prices resulting in no enjoyment of continental free market.
On an average over 200 different types of taxes, fees and charges exist in the five regions of Africa (West, East, Central, South and North). Some examples include solidarity tax, stamp tax, departure tax, safety charge, airport tax, embarkation tax, tourism tax, environmental tax, immigration fee, infrastructure tax, foreign travel tax, tourist development tax, fiscal tax, aeronautical development tax, check-in desk charge, foreign travel tax, passenger service charge and the list keep going.
Let us also take an example of my flight ticket to Senegal:I always ask why do passengers have to pay fuel imposed fees? by also adding Airport Development Charge while even more of Airport are not reliable in termes of infrastructure. If passengers pay ADC charges but after years the airport remained the same why should still pay that? Let me take an example of Nsimalen airport in Cameroon, where there is no internet connection.
The high level of taxes, fees and charges is a critical issue and it is counter-productive for air transport development in Africa. As air transport is considered as a luxury service, government tend to overtax air transport supply chain leading to excessive service charges to the airlines. The average amount of passenger’s paid taxes and fees applied to air tickets is twice more expensive in Africa than in Europe or Middle East.
in addition to that, the reduction of taxes and charges can allow a significant stimulation of demand on the continent and make AfCFTA succesful. This will help our airline to become more competitive, especially against foreign operators, who are based in regions were the taxation is lower comparatively.
If Africa Continet needs to adavance AfCFTA there is a need to reshape our air tranposrtation fees and policy reform in terms of taces, charges and fees.