Airport Passenger Service Charge To Be Pegged To Ticket Value

Ghana Airports organization Limited (GACL) has started the process of introducing a new regime for the collection of domestic airport passenger service charge (APSC) to raise more revenue to support the maintenance of airport facilities in the country.

While the current regime charges a fixed amount of GHcent;5 per passenger irrespective of the price of the ticket, the new approach would ensure that the organization collects a percentage of the value of the ticket.

This means that when the service charge is fixed at 10 per cent, for instance, on a GHcent;100 ticket, it would yield GHcent;10 per passenger, and when the ticket cost increases to GHcent;1,000 per passenger, it would accrue GHcent;100 automatically. 

Known as the ad valorem approach, the airport organization has tabled a policy document to impose that method of charging a percentage on the ticket value before Cabinet for approval.

The GACL made this known in the latest Auditor-General’s Report on the account of public boards, corporations and other statutory institutions in 2023.

It was in response to the Auditor-General’s recommendation that the GACL should liaise with appropriate state authorities for a possible upward review of the airport passenger service charge. 

IATA billing platform

When the essential approval is secured, the current coupon system for collection of airport passenger service charges would be replaced by the International Air Transport Association (IATA) billing and settlement platform for collections.

The domestic airlines mdash; Africa World Airlines (AWA) and Passion Air mdash; would be required to connect to the IATA billing platform. The decision to use the ad valorem approach was agreed upon in a meeting with some relevant stakeholders to discuss an upward review of the domestic APSC, which is currently pegged at GHcent;5 per passenger.

The airport passenger service charge has not been reviewed since 2010, making it challenging for the Ghana Airport organization Limited to generate adequate revenue for the maintenance of Terminal Two of the Kotoka International Airport (KIA) and other regional airports used for domestic operations.

Ad valorem approach

The ad valorem approach for collecting domestic airport passenger service charges is a method of charging a percentage of the ticket value as the passenger service charge.

This means that the APSC is calculated as a percentage of the total ticket fare, rather than a fixed amount per passenger. In this approach, the APSC is typically expressed as a percentage of the ticket value, for example, five per cent or 10 per cent of the ticket fare, to generate more revenue.

The approach has the benefit of being a simple and transparent method of collecting revenue, as the APSC is clearly linked to the ticket value.

Need for upward review

The Auditor-General, Johnson Akuamoah Asiedu, in the report sighted by the Daily Graphic, stated that Regulation 48 of the Public Financial Management Regulations, 2019 (LI 2378), stipulated that a principal spending officer responsible for collecting various types of fees and charges shall review annually the administrative efficiency of collection, the accuracy of past estimates and the relevance of rates to current economic conditions, and submit proposals through the minister to Parliament for approval.

He said its review of the APSC showed that the current APSC of GHcent;5 per domestic passenger had been fixed and not reviewed in the last 14 years.    

“This current charge remains inadequate, and it deprived GACL the needed revenue for the maintenance of Terminal Two of Kotoka International Airport and the regional airports used for domestic operations.

“We recommended to management to liaise with the board and appropriate state authorities for a possible upward review of the airport passenger service charge,” he said. An international aviation expert, Sean Mendis, said the coupon system for APSC was outdated and needed to be reviewed.

“And so, reviewing the APSC is welcome. The only issue is whether the shift to IATA billing is a step towards ‘dollarisation’ of the domestic APSC, which must be avoided to prevent inflation.

“The current domestic APSC is unfit for purpose and needs to be raised to, at least, double or triple its current level of just GHcent;5 per person. There has to be sufficient revenue to support the maintenance and operation of the facilities to ensure they do not deteriorate,” he said.

Mr Mendis explained that passengers would not see any real difference except that it would no longer have coupons stapled to the boarding pass of passengers.
He added that the charge was already included in ticket prices.