By SCOLA KAMAU
Posted Saturday, February 11 2012 at 15:14
Kenya’s Ministry of Transport has directed the Kenya Civil aviation Authority (KCAA), local and international airline operators in the country to form a subcommittee in two weeks to resolve a standoff over the increased air navigation charges introduced November last year.
Operators fear that if the charges are not reduced, Kenya’s domestic and international airline travel will be one of the most expensive in the region, reducing the country’s competitiveness as a regional hub.
The Transport Ministry expects the three parties to come up with recommendations in two weeks time.
“Form a subcommittee and give it a timeline to come up with concrete and practical solutions,” said the director of Air Transport Nicholas Bodo, at a meeting held at the KCAA offices in Nairobi.
The operators proposed that a percentage of the charges be transferred to passengers, if the new charges remain in force. The airlines also want the government to improve aviation services in the country, a burden, they argued, had been left to them.
The aviation authority previously used hours to charge the navigation fee but has since changed to weight and distance for each flight, hurting the airlines’ profits.
Mbuvi Ngunze, the chief operating officer of Kenya Airways said the increase in charges would affect the airlines competitiveness especially with airlines from neighbouring countries like Ethiopia. Ethiopia’s government subsidises its national carrier, Ethiopian Airlines, helping it cut on operational costs.
“The charges are killing competitiveness internationally especially in countries where these charges don’t apply. It’s an added burden on airlines as profits soften,” explained Mr Ngunze at the stakeholders’ meeting.
KQ issued a profit warning recently saying the Eurozone crisis, rising fuel prices and the political tension in Egypt and Nigeria will lead to reduced revenues this year. KQ said its full year earnings for the period ending March 2012 will be at least 25 per cent less compared with the previous year.
Cargo and passenger flights, according to the operators, were supposed to meet some of the tax as the overall gains including security maintenance met by the charges were enjoyed unanimously. However the airlines do not want to effect the charges, arguing it would create unhealthy competition.
“Each ticket should come with a stipulated tax portion to be met by the passenger and cargo and be deducted from the airline’s total tax for ANS,” explained Nixon Ooko, Fly540, operations director.
The Airline also decried the increase in charges saying it was far above the charges in the other East African member states and it would give the region a challenge when it comes to harmonisation of aviation industry operations.
Charges for Nairobi to Kisumu amounted to $154, while a similar distance in Tanzania costs $60, according to Mr Ooko. The low cost carrier for example said its charges had increased by 300 per cent from the period before November last year to the present.
In October for example, the airline paid Ksh2.6 million ($31,000) but the charges have since increased to Ksh9.8 million ($116,000) and Ksh10.6 million ($126,000) in November and December respectively.
The government has failed to fund KCAA according to the airlines, leaving the latter with a bigger challenge in fulfilling this mandate.
Source: http://www.theeastafrican.co.ke
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