IATA warns high air travel taxes threat to Kenya's aviation edge

Kenya's position as an aviation hub is at risk due to some of the highest air travel taxes in Africa.

The International Air Transport Association (IATA), which is the world's biggest airline trade body, warned on Friday the charges could undermine connectivity and economic growth.

The warning comes as Kenya implements new levies and participates in global initiatives for higher premium-class ticket taxes, despite industry concerns about the cumulative impact on travel demand.

According to IATA's analysis of specific air transport taxes, Kenya generated $148 million (Sh19 billion) in ticket tax revenue in 2024, placing it among the top 15 countries globally with an average tax of $21.1 (Sh2,721) per passenger.

Taxes and charges can constitute over 20 per cent of a domestic ticket's price.

Kenya recently introduced an additional air travel levy of Sh600 for domestic flights and Sh6,500 for international travel to support aviation agencies, including the Kenya Airports Authority and Kenya Civil Aviation Authority.

Kenya is also among the countries in the Global Solidarity Levies Task Force, which includes France, Barbados and Antigua and Barbuda, advocating for higher premium-class air travel taxes to fund development and climate initiatives.

IATA's analysis cautioned, however, that such taxes could have unintended consequences, including reduced premium-class travel, higher economy-class fares, or even route cancellations.

The association noted that while premium travel demand appears insensitive to price changes in theory, in practice, elasticities change over time based on economic conditions.

"Lower profits on premium-class travel can lead to higher prices for economy-class tickets or reduced services," the IATA analysis seen by The Standard stated, adding that passengers might shift to economy class, alternative routes, or other transportation modes.

The fragmentation of air travel taxation poses a serious threat to global aviation networks, IATA said, calling for greater harmonisation across jurisdictions to reduce competitive distortions and combat double taxation on international routes.

For countries genuinely committed to climate funding, IATA pointed to the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) adopted by ICAO member states as a more effective alternative that delivers certifiable emissions reductions.

The analysis emphasised that countries like Kenya imposing air travel taxes must weigh potential economic harm against limited revenue gains, noting particular impacts on tourism-dependent markets and low-cost carriers, while creating regressive effects on lower-income passengers.

Kenya's ambition to establish Nairobi as a premier aviation hub for Africa faces significant headwinds, industry analysts say, as it contends with fierce regional competition.

Ethiopia has long been a dominant force, while Rwanda is emerging as a formidable rival, investing heavily in new airport infrastructure.

Meanwhile, Kenya's own efforts to modernise its main airports, often described as ageing and inefficient, have been hampered by delays and funding challenges, risking its competitive position.