in Business & Finance

Proflight cuts fares on removal of jet fuel duty

Posted 20 January 2015 · Add Comment

Proflight Zambia has welcomed the removal of five per cent customs duty on aviation fuel and passed this on to passengers by cutting fares across the board.

The airline has announced that its ticket prices will drop by 5 per cent with immediate effect following the government’s elimination of duty that came into effect on January 1 this year.

The goodwill gesture to passengers comes despite the fact that fuel represents around 30 percent of Proflight’s costs, and thus overall savings to the airline are only around 1.5 percent of total costs. In addition, fuel stocks from 2014 are still being used, hence the duty removal has not yet been passed on to the airline by suppliers.

Notwithstanding the fare reduction, Proflight pointed out that the aviation sector is a US dollar-intensive industry, with much of its costs denominated in foreign exchange, including aircraft leasing and maintenance, and thus the depreciation of the kwacha in recent months has driven up costs in kwacha terms.
“Last year was a tough year in the domestic market with very little growth in demand. Competition from international carriers flying direct to Ndola and Livingstone has also hampered domestic traffic growth,” explained Proflight director of government and ndustry affairs Captain Philip Lemba.

This year also promises to be a difficult year as more competition comes into the market. And there is concern that international carriers entering the market will employ predatory pricing tactics in order buy market share.

It is hoped that the steep decline in oil prices on the world market will translate into meaningful reductions in the Zambian Jet Fuel price, said Capt. Lemba, who added that despite a slowdown in growth international passengers, the airline had seen growth in domestic tourism as the Zambian economy grows, and it is hoped this trend will continue.
 

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