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The fuss over airfares – 24th Jun 2013

shot0007The fuss over airfares based on the fury of some including Guyana’s acting Tourism Minister Irfaan Ali has led some knowledgeable in the aviation sector to remark that the Minister’s comments on fares are not exactly fair. It is what the Tourism Minister did not say about the actual ticket prices that has led to the comments.

Minister Irfaan Ali remarked that the Caribbean Airlines ticket prices are too high for Guyanese and others wishing to travel to and from the country. Travel Industry specialists are saying however, that the peak season prices are just that; peak season prices. Had the passengers booked and paid for the tickets in advance, advance purchase, then tickets are a lot cheaper. But as in any market-driven business the cheap tickets go first.

What more competition would do, according to industry watchers, is to allow more “cheap tickets” to become available on other carriers. Now the danger there is, according to aviation sources, that the airline with the deeper financial pockets is more likely to withstand the competition. Any newcomer airline, the aviation industry sources say, will find it hard to survive even at lower fares because the actual cost of flying is a lot higher than 30 or 40 cheap seats per trip. Guyana’s aviation sector has had several airlines that just came and left, the last one being DELTA.

In addition to what Minister Ali did not say, is that Guyana has a really high travel voucher tax, 15 percent on the base fare and in most cases it is higher than other Caricom countries and even the United States. LIAT has to apply several country imposed surcharges and fees on travelers too. All these are Government charges the revenue goes to the State rather than to the airline.

One Industry analyst said that if Guyana’s acting Tourism Minister is indeed serious about airlift into and out of Guyana, he could recommend to his Cabinet colleagues that Guyana lowers the 15 percent Travel Voucher Tax, as it does when fuel prices rise. Last year when three airlines were competing for passengers, the State gained in revenue one point three billion dollars in Travel voucher and travel taxes.

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