Removal of 17.5% VAT pushes up domestic air travel

Government’s removal of the 17.5% VAT on domestic air travel has resulted in a substantial increase in the volume of domestic air travel by about 24%.

Making the disclosure at the 2017 Ghana Transport and Logistics Conference in Accra on Thursday: Deputy Minister of Aviation, Kwabena Okyere Darko Mensah said over the last six months to one year – specifically, between May last year and the same period this 2017, domestic air travel volume increase from 163,322 to 201,851.

Mr Mensah stated that: “the government through its first budget has removed the 17.5% VAT on domestic air fares to make domestic travel affordable. As a result of this policy intervention, the passenger throughput has increased significantly from 163,322 as at May 2016 to 201, 851 as at May 2017 representing 23.6 percent increase”.

He also reiterated the fact that, the ongoing expansion works at various airports in Ghana will further boost the volume of domestic and international air travel in the country.

He noted that “the Ministry [Aviation ministry] remains committed to government’s pledge to encourage and support local airlines and entrepreneurs to set up strong private airlines that can fully utilize the nation’s route rights. In line with this, the Ministry has obtained approval from the Nigerian Ministry of Aviation for Africa World Airlines to commence operations to Abuja in addition to its Lagos route”.

As part of efforts to position itself as ‘West Africa’s business hub’, the government through the Aviation ministry has rolled out a number of intervention programmes in the sector.

They include the decoupling of aviation regulation from air navigation services provision, construction of a modern air navigation services centre at the Kotoka International Airport; construction of phase II of the Kumasi airport consisting of the extension of the run-way and a new terminal building. 

Ghana, in 2016 recorded a total air travel volume (domestic and international) of 2, 381,789 and expects to increase that figure to at least 5 million over the next five years: if the expansion initiatives pay-off.