Business

Falling oil prices to reduce air fares

MATHEWS KABAMBA, Lusaka
PROFLIGHT Zambia says there is a real potential for lowering air fares if the oil prices on the international market continue to decrease in the year.
A fortnightly ago, the price of oil on the global market fell below US$50 a barrel for the first time since 2009.
Proflight Zambia director of government and industry affairs Philip Lemba said in a response to a press query that the price of air fares could drastically reduce if the price of jet fuel on the international front maintains a downward trend.
“If the dramatic decrease in world oil prices holds for the remainder of 2015 and feeds through to Zambia’s jet fuel price then, there will be a real potential for lowering of prices,” he said.
In the 2015 national budget, Government proposed the removal of five percent customs duty on aviation fuel to reduce costs in the aviation industry.
Captain Lemba welcomed the removal of customs duty on aviation fuel saying the decision will reduce the cost of doing business.
“Any move aimed at reducing the cost of business, particularly in an economically sensitive sector such as the aviation industry can only be a step in the right direction,” he said.
Captain Lemba, however, said the impact of the removal of five percent duty on aviation fuel is minimal to translate in any meaningful reduction of air fares as there are other factors such as foreign exchange, among other things.
“The removal of duty has yet to be fully passed on to airlines, and is likely to be mitigated by the effect of the depreciation of the Kwacha,” he said.
Last year, the country saw the withdrawal of KLM passengers’ flights into Zambia citing low profit contribution from the route, and after three months of operations, Mahogany Air stopped operation in September.



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