IATA introduces plan to enhance African air cargo operations
June 04, 2013
As we noted earlier this week, Nowhere is the potential for aviation greater than on the African continent.
But according to the International Air Transport Association (IATA) the high cost operating environment in Africa places the continent’s airlines at a competitive disadvantage that impedes the important role that aviation connectivity could play.
Here is what IATA has been telling its members at the 69th Annual General Meeting (AGM) and World Air Transport Summit in Cape Town, South Africa.
• Fuel: Fuel costs are 21% more expensive in Africa than the global average. Government policies towards aviation in Africa tend to see it as an “elite” product, rather than as a critical component of the continent’s economic infrastructure. As a result, it is heavily taxed—often in violation of International Civil Aviation Organization principles that prohibit the taxation of jet fuel for international operations. Moreover, despite high infrastructure charges, the failure to invest in fuel supply infrastructure has resulted in frequent supply disruptions that cripple the operations. Angola, Ghana, and Uganda have begun to address fuel issues, setting a good example of progress.
• Taxation: Africa also suffers the impact of onerous direct taxes on tickets. Solidarity taxes, tourism taxes, VAT, sales taxes and infrastructure levies and taxes all make connectivity more expensive. This limits the power of aviation to drive economic growth, which would be a much greater source of revenue for governments.
• Liberalization: African economic growth will demand better connectivity—integrating African economies and connecting them to world. This must be better enabled by government policies.
Aviation already has a significant footprint in Africa—supporting $67 billion in economic activity annually and 6.7 million jobs. In South Africa, aviation supports some 350,000 jobs and contributes approximately ZAR 74 billion to South African GDP. The AGM is attended by some 700 aviation leaders representing IATA’s 240 member airlines, their partners and stakeholders.
IATA is calling for a major reduction in fuel prices in Angola—which were among the highest in the world.
It is also demanding the removal of charges for a Stabilization Fund in Ghana that was essentially a subsidy for non-aviation fuel users, and the improvement in fuel storage facilities in Uganda that will help to avoid previously frequent fuel shortages.
Finally, some readers are telling us that they are trying to learn more about the chain of custody of conflict minerals from the Congo region of Africa into our Tier 1 suppliers, as a result of new laws (Frank Dodd 1502).
We invite any and all insight on this issue.
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