The removal of the 17.5 VAT on domestic airline tickets has led to about 10% increase in domestic air travels, the Minister of Aviation, Cecilia Abena Dapaah, has told Parliament.
The minister, who was answering a question in Parliament by the ranking member of the Transport Committee of Parliament, Kwame Agbodza, said the removal of the VAT on domestic air tickets had not only impacted on air fares but also attracted a lot more people to use domestic air lines.
For instance, she said that Starbow reduced its fares from GH¢375 between May and November, 2017 to GH¢315 for Accra-Tamale and from GH¢315 to GH¢265 for Accra-Kumasi within the same period. African World Airlines reduced its fares from the range of GH¢375-GH¢500 to GH¢320-GH¢400 for Accra-Tamale and from the range of GH¢315-400 to GH¢270-GH¢340 for Accra-Kumasi.
According to the Aviation Minister, the number of passengers increased from 295,278 between May and December 2016 to 323,754 within the same period in 2017.
She however said because of the suspension of operations of Starbow as a result of the accident involving one of its airlines at the Kotoka International Airport on November, 2017, African World Airlines has taken advantage of its monopoly on the domestic front to increase its fares again but she had intervened.
“The ministry has occasionally received reports of purported increase in air fares by the African World Airlines (AWA) being a sole domestic operator now. In reaction to this, we have engaged AWA and the ministry is satisfied from the engagements that air fares have been competitive compared to the period of the inclusion of the 17.5% VAT,” the minister said
She also said as a policy of the government, local entrepreneurs and other airliners are being encouraged to set up stronger private airliners to boost the vision of making Ghana the regional aviation hub, with a prospective investor, Baby Jet Airlines, consenting to start domestic airline operations in the country very soon.
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