New $10 airlines tax a case of taking 5 steps back, and 2 forward

New policies will no doubt deter tourism arrivals and further dampen appetite for travel in an environment that is now more expensive due to added cost of COVID tests

COMMENT | DEREK NSEKO | News that the Uganda parliament has okayed a $10 tax on outbound passengers from Uganda comes as a shocking and unacceptable development.

African countries have always treated the aviation industry as a cash cow largely due to a lack of understanding of its significant role to the economy. Indeed aviation and by extension, tourism are economic enablers with an ecosystem that has the potential to greatly boost GDP

For a country like Uganda which is blessed with amazing Flora and Fauna, it is in the interest of government to create an enabling environment for tourism to thrive. Destination marketing and reliable and affordable air connectivity are at the core of this

Due the devastating impact of COVID-19 on the industry, international governing bodies such as AFRAA, IATA and ACI have recommended a string of guidelines that will help the industry survive and navigate a recovery.

High on this list has been the need for governments and institutions to provide financial support to the industry and importantly to address the issue of high taxes and levies that are chocking the industry and affecting its long-term sustainability.

The guideline details are:

• Financial support to airlines as well as the implementation of harmonized and internationally adopted health and travel protocols are a top priority focus area for the industry restart.
• African States urged to expedite the vaccine roll-out campaign in Africa, lift prohibitive travel restrictions, adopt globally interoperable digital health pass or certificate and make available universal, accessible and affordable COVID-19 testing facilities to all air travellers.
• Need for a greater collaboration and acceleration of the collective efforts among stakeholders with States and financial institutions urged to provide financial support to the travel industry. Airlines on their end encouraged to improve the sustainability of their operations in order to enhance their bankability and thus be in a position to receive better support from financial institutions.
• African Airlines encouraged to be flexible, lean, smart, collaborate and have a clear strategic focus putting in place a future-ready business model.
• Stakeholders urged to address the issue of high taxes, fees and charges that impact the sustainability of the air travel industry and support the implementation of the Africa Continental Free Trade Agreement (AfCFTA) and the single African Air Transport Market (SAATM) to drive business growth in Africa and intra-Africa connectivity.

Uganda’s law-makers have surely not read the memo and have implemented what can only be described as lazy policy making which has no place in Uganda’s small and fragile economy

Travel and tourism which could provide welcome economic relief is instead now a target. The Uganda national airline which is itself reeling from the effects of the pandemic is now banking on a recovery in tourism and travel as it prepares to ferry long haul passengers to and from the country.

With the new policies in place that will no doubt deter tourism arrivals and further dampen appetite for travel in an environment that is now more expensive than ever due to added cost of COVID tests, we can expect the national airline to in-turn come back to the tax payer for another major bailout.

There is no overstating the damage such policies have in the long run and the idea that 70% of the proceeds from this tax have been earmarked for the tourism sector is incredibly short sighted.  A case of taking 5 steps back and two forward. It is not sustainable and does not serve the long term growth of Uganda’s tourism and aviation sectors

How can we get the tourism and travel industry back on track, how can we boost brand Uganda and restore travel confidence, how can we lower the barriers around cross border travel, how can we streamline and standardise health protocols and most importantly how can we make travel more affordable? Pertinent questions that have only received the rugby equivalent of “side stepping”

With the right policies, we can build a more resilient economy, one that can help the country build back better after a crisis .

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The writer, Derek Nseko is an aviation expert, a qualified commercial pilot and managing director at iFly Global. He is the founder of Airspace Africa an online publication dedicated to African aviation.
derek@airspace-africa.com twitter: @av8r_derek