Kenya airlines and tourism stakeholders say no to extra fee

(eTN) – The coming into effect of the new Kenya Tourism Bill last week, when President Kibaki made it law by putting his signature to it, will also usher in an era of additional public bodies to be created, and more important, to be financed. The now mandatory formation of such new bodies as the Kenya Tourism Authority, the Kenya Tourism Finance Corporation, and others is driving home the final recognition that all of this will require funding, something the sector has already been short of in recent years.

Tourism marketing alone is asking for a mult-billion budget allocation, and while certainly “paying back” by bringing in ever more tourists; creating jobs and investments; and contributing to the national coffers by a range of assorted fees, charges, and taxes, the Ministry of Finance has not given enough financial support in the past to allow the Kenya Tourist Board to fully implement their ambitious plans, even though regionally they do spend the most money to lure tourists to the country.

The new bodies, however, are now equally looking at the treasury and are hoping to get their slice of the money cake set aside for the tourism sector, something which has not amused the marketing gurus, one of them saying overnight to this correspondent: “This is our money; we are fighting hard for our budget and cannot share it with other new bodies. They must also learn to find funding, but please not by cutting our already limited funding.”

Minister Balala, normally an outspoken advocate of higher government funding for his sector, has now opened another can of worms when earlier in the week he proposed a new fee on airline passengers of US$10,something which immediately drew a mixed reaction from the industry.

A regular aviation source said: “Our government thinks this industry is a cow, which gives butter cream and milk without feeding it. KCAA [Kenya Civil Aviation Authority] [is] already looking at increasing some of our fees by as much as 400 percent. Now if Balala wants to find money for marketing, and I bet you it is not for that alone, but to finance his new empire building with all those additional bodies, no one knows even what they are supposed to do, he should look elsewhere. They could increase the catering and training levy for instance, which is specifically to finance the sector. Why add again more charges for air tickets?

“Germany and Austria have done that with their eco taxes, the UK, too, is moving that way, and aviation there is suffering from dropping demand. The EU emission trading scheme of next year will load a lot more financial burden on airlines, and this makes flying to Kenya more expensive again. Now we also want to add US$10 to that? Our government should cut down on size and not hide behind the new constitution that everything has to expand in public service. If there is not money, they should shelve it, trim fat cat benefits for parliament and procure services competitively. We in the private sector have to tighten our belts, and the public sector is growing fatter.”

Other tourism sources have also expressed their dismay over loading tourists with yet higher costs, and one regular contributor said: “…and then there is the Eurozone crisis. We do not know how this will affect us. If this spreads around the globe like in 2007/8, we might see another downturn. Into this climate of uncertainty let us not increase cost but seek to be competitive. And we must be sure, absolutely sure, that any additional money by taxes, levies, and fees from tourism comes directly to tourism and [does not] not [go] to the treasury. Once money goes there, it never comes out again, or only a portion, so that is something we in the private sector will not budge on. If money must be raised for tourism marketing, let it be for marketing not other administration expenses, strictly.”

Mixed feelings then over the minister’s attempt to find more funding, a lot more funding in fact, and the ongoing debate which is undoubtedly going underway now will be closely monitored as it unfolds between Kenya’s private and public sectors.