Just last week Virgin Atlantic Airlines announced plans to suspend its flights to and from Accra due to the high cost of aviation fuel among others.
The British Carrier’s exit would be the third by such international airline in recent times.
In Joy Business’ Special Friday Feature on Everyday Business, Paa Kwesi Asare examines how this is likely to impact on Ghana’s economy.
Director of Airline Planning at Virgin Atlantic, Edmund Rose announced the airlines’ decision to suspend its operations in Ghana beginning September. This is coming after three years of operations in the country.
United Airlines also stopped flying direct to Washington DC from Accra in April 2012 - only two years after launching in Ghana. Brussels Airlines also in the same year halted their operations in Ghana.
When most international airlines launch their operations in Ghana, they proclaim Ghana’s economic prospects for their business as the major incentive. The recent developments have therefore brought into question, the veracity of such claims about Ghana’s investment climate.
Managing Director of Air Namibia which recently rescinded an earlier decision to suspend operations in Ghana says the airline business directly impacts on tourism.
Meanwhile, some have however blamed Virgin’s planned exit on financial challenges.
Information gathered by Joy-Business reveals the company last year recorded a loss of about 150 million dollars and has been compelled to sell 49 percent of its stake to Delta Airlines.
The cost of aviation fuel which the airline cites as one of the reasons for its exit is the highest on the west coast - about 30 percent more than that in other countries.
It therefore appears not to make business sense for any airline that cannot generate enough revenue to meet such costs to continue operating. But Transport Minister, Dzifa Attivor in response to Virgin’s exit says government has done its best to drive down taxes on aviation fuel
There are concerns the country may as a result of these successive airline exits be losing millions of dollars in taxes to government. Aviation expert, Tei Azu explains the development is worrying for Ghana’s investment climate.