Domestic Airlines: Competition Heats Up!

Ghanaians will vote in general elections this coming December. Politicians are criss-crossing the country to woo voters and the campaigns show that this is going to be one of the tightest and most competitive elections in recent times.

Up in the skies, a different kind of battle has been been waging. Ghana’s domestic airline industry is seeing a competition never seen before. There was oly one domestic carrier in 2003 with a monopoly over the market. Almost a decade later there are 5 domestic airline operators competing for customers:

§         Citylink (Egypt-Ghanaian owned)

§         Antrak Air (Ghanaian-owned)

§         Fly540 (-owned)

§         Starbow Airlines (Privately-owned,)

§         Africa World Airlines (Ghana-Chinese joint venture)

According to the local regulator the Ghana Civil Aviation Authorithy (GCAA), many more airlines have applied and going through the process to be licensed. 

The main routes plied by these domestic carriers are Accra-Kumasi, Accra-Takoradi, and Accra-Tamale. Only Antrak Air flies to Accra-Sunyani. These are only four regional capitals out of a possible  nine cities theycould fly to.

Prices used to range from GHC 100 upwards $ one-way  on the Accra-Kumasi route and GHC 200 for a return ticket.  But with increased competition, presently one way on the same route starts from GHC 49 and a return ticket starts from GHC 99. This means prices have tumbled down by 50%.

There are many reasons which explain why Ghanaias are taking to the skies.

An improving economy means many Ghanaian consumers having incomes to afford to pay extra to fly instead of using the road. Ghana became a lower middle income country last year and the middle class is growing. Ghana’s economy is also doing well with Foreign Direct Investment (FDI) inflows of $3.2 billion last year been the the tird higgest in Africa after Nigeria and South Africa. Business activities have thus picked up and these activities are not concentrated in the capital of Accra alone. The need for business trips to other regional capitals have seen a demand for quicker travel hence the growth in patronage of domestic airline business. 

A lot of this FDI inflows has to do with Ghana’s oil and gas industry which is situated in the third largest city of Takoradi. The demand on this route is very high too.

The country’s roads are notorious for their accidents and traffic jams. An estimated 2,000 die annually from road accidents. For those who can afford it, the safety and speed of air travel is worth the expense. 

Last but not least, the African Business Magazine estimates that “74% of intra-African routes have only one daily flight while around half of the continents cities are underserved”. In short the demand exists and if served the routes will be patronised. 

This past week the major topic of newsis not about election campaigning but the sudden closure of the Kumasi Airport (Kumasi is Ghana’s second largest city and the most popular domestic route). According to the domestic carrierd they were not given prior notice before the airport was closed. The GCAA said that the runway had developed potholes (yes huge potholes) and the closure was to enable repair works to be undertaken on the runway.

Led by Antrak Air the domestic carriers claim they had sold tickets to customers in advance and the continuous closure was causing loss of profits. Antrak made allegations in the media that the Kumasi airport was not made to for very large aircraft but the regulator had allowed a rival carrier to be landing larger aircrafts at the airport and contributing to the damage to the runway. They also claimed that this is the third time in 12 months that the airport was being shut down. Antrak has threatened to suee the GCAA for a compensation of $300,000.

Although the airport has reportedly been opened as at press time, it has raised a few issues I want to point out in this keen competitive industry.

The domestic airlinesector in the country grows at an annual rate of 15% and with its bound to grow. In other identical industries like the telecommunications and financial services sectors where competition has slashed prices by 50%, it led to expontial growth and patronage by consumers.

I think the carriers must come together and form an association so they can fight together on issues of concern. TheKumasi airport closure looked like a fight between GCAA and Antrak air just because the carriers domestically do not speak with one voice. There are other significant issues on the domstic airline front such as cost of aviation fuel, airline taxes, landing rights and so on that an umbrella body can pursue and find solutions to.

This issue is significant because growth in the airline industry can lead to growth in the tourism industry. Some of Ghana’s major tourist sites are located outside Accra-Mole National Park (Northern region), Kakum National Park (Central Region), Elmina/Cape Coast castles (Central region), Paga Crocodile Pond (Northern region), Boti Water Falls (Volta Region) and others. A well developed domestic airline route will mean tourists can easily access these venues with ease and bring increased revenue.

This brings me to the sector ministry overseeing affairs of the airline industry-the Ministry of Transport. I believe its remit is too large as it overses road transport, rail transport and the harbours. I hereby propose for the re-introduction of the ‘Ministry of Aviation’. We had a Ministry of Aviation under the former government but it was scrapped when this current administration made it the ministry of transport.

An aviation ministry will be solely focused on the aviation industry and will better tackle the specific issues mentioned above.

There is the urgent need for various airports in the country’s underserved regions to be upgraded so that domestic carriers can fly there to oene up economic activies in those regions.  I am talking about Cape Coast, Bolga, Navrongo, Koforidua, Sunyani and Ho. Flight services to these cities will be a lot of much-needed employment.

Starbow currently has started flights outside the shores of Ghana by flying to Benin in West Africa and looking to add 12 new routes in West Africa in the next 12 months. New entrant Africa World Airlines also has plans to fly to West Africa after it starts domestic operations. All these future new routes pre-supposes that the future is sub-regional hence the call to upgrade our airports is important.

It is refreshing to note that the GCAA with a Brazilian company to upgrade the TAMALE Airport into an international one at a cost of $174 million. The airport will be intregrated with a perishable cargo center, airport city,  Hajj Pilgrimage center and others. This has been long overdue. Ghana’s neigbour Ivory Coast has two international airports (Abidjan and Yamousoukro). Nigeria has many international airports and Ghana is now playing catch up. 

Ghana’s economy is growing and expanding and the more serious attention is paid to the airline industry, the more it will enable its population to take to the skies.