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Taxes to drain African airlines' profits

19 April 2013, 12:53 AFP

Cape Town - Africa's airlines are set to earn $100m in profits this year but face heavy taxes with fuel costs that are way above the global average, the industry's body chief said Thursday.

"Much of the problem is that government policies in Africa tend to see aviation as something of an elite product," said International Air Transport Association (IATA) director general Tony Tyler.

The sector was not seen as "a critical part of the continent's economic infrastructure".

"As a result of that, it's heavily taxed and often it's taxed in violation of international principles which prohibit the taxation of jet fuel for international operations," said Tyler.

Aviation fuel is 21% more expensive in Africa than the world average and accounts up 44% of costs, said Tyler.

The body is lobbying governments to review this, and has met success in Angola, Uganda and Ghana.

The aviation sector in general was seen as "a soft target" by governments, he told the Cape Town Press Club.

The IATA was working to convince African governments that a combination of taxes - from VAT to tourism fees - was "limiting the economic benefits that aviation could be bringing".

Safety was Africa's biggest challenge, with the continent accounting for about 3% of global air traffic but 17% of accidents.

Last year there was one accident per five million flights on average globally. But in Africa, one jet was lost for every 270 000 flights, said Tyler.

However moves were afoot by African states to bring airline safety to global standards by 2015.

Globally, the sector is set for $10.6bn in profits this year with a net profit margin of 1.6%.


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