East African states work to reduce regional air travel costs

By Luke Anami

Plans are underway to reduce air travel charges in East Africa to ease the free movement of people, goods and services.

The process includes the harmonisation of air travel policies of each partner state, examination of the factors that determine air ticket costs and development of uniform air travel regulations.

A meeting of Transport and Communication ministers from the EAC partner states chaired by Kenya has since issued a directive to the East African Community secretariat to initiate the process.

"It was proposed that the EAC Secretariat convenes the meeting in consultation with the hosting Partner States and the outcomes of the Forum be channelled to EAC policy organs through the Sub-committee on Air Transport," said Wavinya Ndeti, Kenya's chief administrative secretary in the Ministry of Transport, Infrastructure, Housing, Urban Development and Public Works, adding, "On Liberalisation of Air Transport in the EAC, the regulations have been developed and the process of finalising these regulations is ongoing."

The 17th sectoral council of EAC on Transport, Communications and Meteorology, chaired by Kenya's CAS Ms Ndeti also directed partner states through the EAC Secretariat to review and harmonise charging mechanisms, fees and taxes to reduce ticket costs and increase demand for air travel.

"We are aware of the directive and the transport and communications ministers are due for another meeting probably before the end of the year to provide the policy framework under which the changes would take place," said Peter Mathuki, EAC Secretary General.

EAC has one of the most expensive flight routes in the world per seat costs led by the Nairobi to Entebbe, Nairobi to Kigali and Nairobi to Dar es Salaam routes.

Air transport in East Africa in general is expensive by international standards going by the current high passenger airfares and freight charges. The expensive rates on both passenger and cargo flights contribute to the high cost of doing business in the region.

A passenger airline ticket between Entebbe and Nairobi costs $380 on average while that between Nairobi and Dar es Salaam is between $350 and $400 for economy class.

It is estimated that 43 per cent of air ticket prices in EAC comprise of regulatory charges and taxes, landing and parking rates, with regulatory fees accounting for up to 24 per cent.

"When you look at the breakdown of an airline ticket from Dar es Salaam to Nairobi, most of the charges are just government tariffs. If all those are removed, it will reduce the fares and ease free movement of goods and services," said Dr Mathuki, adding, "It could be cheaper to travel within East Africa. In fact it could be less than $100 if the EA partner states removed all those tariffs."

The EAC Secretariat has written to regional airlines requesting them to submit the list of all air ticket charges for review and harmonisation. The proposed harmonisation will result in reduction of air fares within the regional routes.

"Yes, the EAC has written to us. They want to know the taxes and the tax regimes of different airlines whenever they travel to different countries," said Allan Kilavuka, CEO, Kenya Airways.

"The big question is for EAC government to interrogate the tax regime in order to harmonise travel fares. It is imperative to note that KQ taxes that are paid are different from Uganda airlines or any other airline, when they are in their country of origin," he added.

A study by the East African Business Council titled Costs and Benefits of Open Skies in the East African Community, released on August 3, said that harmonisation of air travel could lead to a reduction in air fares by nine per cent; and a 41 percent increase in frequencies which would stimulate demand.

"Research has repeatedly found that liberalisation has led to increased traffic volumes, greater connectivity and choice and lower fares," said John Bosco Kalisa, CEO of the EABC.

"Furthermore, the benefits of air service liberalisation extend well beyond the aviation industry, it contributes to greater trade and tourism, inward investment, productivity growth, increased employment and economic development," he added.

The study established that liberalisation between Burundi, Kenya, Uganda, Tanzania and Rwanda could result in an additional 46,320 jobs and $202.1 million per annum in GDP.

Indeed, the high cost of air transport in the region is attributed to the slow pace of liberalisation.

This article was originally published by The East African. [Photo: The East African]