Fuel, taxes and loans are driving up airfares – Prof Quartey

Economist Professor Peter Quartey has attributed Ghana's high domestic airfares to a combination of factors, including taxes, aviation fuel costs, loans, and the small size of the local market. Speaking on Joy News’ PM Express Business Edition, Quartey highlighted that the high cost of doing business extends beyond the aviation sector, with hotels and other services also being expensive.

He noted that Ghana's smaller aviation market makes it difficult for airlines to benefit from economies of scale available in larger markets like Nigeria. With a larger population and more traffic, airlines in Nigeria can charge lower fares due to competition and more available aircraft. Quartey also pointed to lower income levels as a factor limiting demand for domestic air travel, as most people prefer using road transport.

He further mentioned that airlines operating in other markets have a longer history, such as Ethiopian Airlines and Kenya Airways, which gives them an advantage. The Ghanaian tax environment was also identified as a contributing factor, with taxes adding up to around 20%, higher than the average VAT of less than 15% in many African countries.

Quartey also highlighted the cost of credit as a pressure on airlines, as they have loans to service and cover their costs. He emphasized that the focus should now be on developing Ghana's aviation market to attract more players, noting that greater investment would come once the market becomes more attractive and profitable.