Regulatory charges have pushed up ticket prices, slowing air travel in East Africa despite more than 10 years of liberalisation of the aviation sector, a new study indicates.
The study commissioned by the East African Business Council shows that regulatory charges alone account for up to 24 per cent of air fares in Kenya where airlines have to pay $50 (Sh5,150) as departure tax in addition to landing and navigation fees.
The industry also faces 16 per cent Value Added Tax (VAT) on tickets and spare parts in Kenya as well jet fuel tax.
By comparison, Uganda and Tanzania both charge $40 (Sh4,000) as departure tax while Ethiopia asks for $30 (Sh3,000) from airlines departing from its national airports.
Similarly, Kenya charges a navigation fee of $819.99 (Sh84,357) and a landing fee of $1,750 (Sh180,250) on Boeing 777-300ER compared to$330 (Sh33,990) and $1,755 (Sh180,765) respectively that Uganda charges on the same aircraft model; and $360 (Sh37,080) and $1,422.53 (Sh146,466) respectively that it pays in Tanzania.
“The EAC should harmonise air transport regulations, specifically taxes across the region and finalise the EAC Liberalisation of Air Transport Regulations also fully implement Yamoussoukro Decision,” EABC chief executive Lilian Awinja said on Wednesday during the release of the findings in Nairobi.
The study shows taxes and airport charges are high and non-uniform within the region. For example, departure taxes in Rwanda are just $37 (Sh3,811), $50 (Sh5,150)in Kenya and $20 (Sh2,060) per passenger in Burundi.
In the case of Tanzania, domestic and international flights share the same tax rate, something that industry players warn could hamper the growth of regional EAC traffic.
The study shows only nine per cent of passenger traffic in the region is intra-EAC, compared with 16 per cent intra-African countries and 46 per cent between Africa and the outside world.
“Air traffic growth between the EAC countries has been relative low compared with economic growth, suggesting that other factors, such as regulation, taxes, infrastructure, are impeding growth,” states the study
As a result, the airlines are operating on low number of routes in East Africa with each route grappling with the low frequencies, states the study.
Over half the routes in the region are operated less than daily, limiting passenger choice and making short duration trips difficult.
Majority of routes are served by only one airline, giving the airlines a monopoly on those routes.
