High Cost of Domestic Airline Fares: Can the Government Do Something About it?

An online post has brought public attention to the exorbitant cost of domestic air travel in Ghana. Consumer anger is not proof of exploitation, but a starting point for investigating the factors driving up prices. Domestic airfares are part of a broader problem where many everyday business inputs in Ghana are perceived as expensive relative to income levels. This situation can be attributed to the overall Ghanaian pricing culture.

The domestic air travel market in Ghana consists of two main scheduled carriers, Africa World Airlines and PassionAir. The post examines fare data for various routes, comparing the prices across Ghana and other countries. On average, Ghanaian fares were significantly higher, with the highest fare nearly twice the average of other surveyed markets. While European routes had higher maximum fares, the average was still close to Ghana's highest fare.

The high ticket prices can be attributed to several factors. First, aviation carries large fixed costs, regardless of whether a flight is full or half empty. Second, Ghana has limited scale, with thin routes and uneven demand making frequent service difficult to maintain. Third, airlines face currency and input-cost pressure, with revenues earned in the local currency and many expenses, such as leases, fuel, and maintenance, incurred in foreign currency.

Fourth, competition is limited, with only two airlines operating in the market. Lastly, government charges, such as the Airport Infrastructure Development Charge, add to the cost of domestic flights.

To address the issue, the government should take deliberate action to tackle the factors driving up domestic airfares. By doing so, Ghana can aim to establish itself as an aviation hub for West Africa.