We are taxing, overtaxing the industry – Prof Quartey on high domestic airfares

Ghanaian economist Professor Peter Quartey has blamed high domestic airfares on a mix of taxes, fuel expenses, the market's small size, and high borrowing costs. His remarks surfaced as passengers questioned the affordability of flying within Ghana compared to neighboring nations. In an interview on Joy News’ PM Express Business Edition, Quartey noted that the aviation industry's high operating costs affect more than just airlines.

He pointed out that hotels, rents, and other aspects of life in Ghana are also pricey. The economist also highlighted that Ghana's domestic aviation market is smaller than those in countries like Nigeria. With a larger population and more frequent traffic, Nigeria's market enables airlines to operate more aircraft and compete more effectively, leading to lower fares.

Quartey pointed out that Ghana's lower income levels and preference for road transport also limit demand for air travel. He emphasized that the country's tax system is overly burdensome, stating that the industry is being "overtaxed." This added tax burden is ultimately passed on to consumers. Quartey also attributed high borrowing expenses and aviation fuel costs – which account for about 30% of airline operating expenses – to the price increase.

To improve the situation, Quartey urged the development of the industry, attracting more operators and creating a more favorable business environment. He noted that once the market is bigger and the environment more profitable, more investors would be willing to enter the sector.