High jet fuel, taxes retard Nigeria’s, Africa’s aviation growth-RwandAir’s CEO

 

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Wole Shadare, (Istanbul, Turkey)

The Chief Executive Officer of RwandAir, Yvonne Makolo said African airlines are really disadvantaged with the high rate of jet fuel, saying Jet A1 costs four or five times more in Africa than Europe. She added that the situation has made airfares in the continent to be expensive.

In terms of jet fuel within the continent, the continent’s carriers are already paying such a high premium of four times worth airlines in Europe and the Middle East are paying for fuel which already puts them at a disadvantage. That is another reason ticket prices are so high because of the cost of jet fuel.

Africa Union

Asked if Sustainable Aviation Fuel (SAF) could be an alternative to reducing the high cost of jet fuel, she advised governments to incentivise the producers to grow plants, attesting to the abundance of raw material for SAF in the continent.

“But the big question is, “Are people willing to invest in it to produce it, and if they produce it, will they produce enough of it? If they produce enough of it, will we be able to afford it? “Are people willing to invest in it? When they produce it, would they produce enough of it? If not, our ticket prices will shoot up. It is a very tricky lemon that we have on our hands right now.

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Aside from the high cost of jet fuel, she berated African leaders for the high charges on tickets; a situation she said had added to the burden of many people that would have ordinarily taken to air transportation, lamenting that air travel had been classified as a luxury only available to few or same people that can afford air travel.

If one takes a look at the average in West Africa or in most of the countries in Africa, one can see government tax, and infrastructure tax, among other taxes, keep going. These are not understood by travelers. They think airlines are overtaxing. The net-fare that comes to the airline is very minimal to take care of all the operational costs, handling, over-flight permit, catering, and others.

Makolo equally expressed her displeasure with the lack of adequate aviation infrastructure and high taxes which she said has slowed down the growth of air transport in Africa.

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Speaking to Aviation Metric at the ongoing International Air Transport Association (IATA) 79th Annual General Meeting (AGM) in Istanbul, Turkey, she said the biggest challenge RwandAir had to expand its operations in Nigeria was the inability of her airline to repatriate its money out of the country.

Makolo who declined to disclose how much of the airline’s fund is trapped in the country simply said, “Let us just say that it is significant, and for a medium size airline like ourselves, that really puts a strain on our operations.”

“That also constraints what we can do within the market because ideally, we should be flying not only daily but double daily but we are not able to do that because we don’t know when we are going to get our money out. So, we had to shrink a bit of our operations to Lagos and Abuja but we hope that once this issue is resolved, we will really go out to capture that market because it is a strong market.”

Chairman, West Link Airlines, Capt. Ibrahim Mshelia has equally cried out about multiple charges in the aviation industry saying the slamming of bills on airline operators and service providers by agents of the government are ridiculous.

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Speaking to our correspondent, Mshelia said, “Nobody calls for anything unless you are paying else amount and they just do things as they like. The airlines have to add these charges to their tickets. Because airlines need to stay within the context of this pricing, they have to reduce their own income in order to accommodate these huge costs”.

“That is why no Nigerian carrier can grow past where they are. No Nigerian airline will ever pass where they are. I don’t support national carrier being run by the government but in Nigeria I do. That is the only way it would work. Did you read the business case of Nigeria Air and Ethiopian Airlines? For 15 years, they will not pay taxes because if they do, they will not be able to recover their investments and all the rest”, he added.

 

 

Wole Shadare