third in a series of blogposts on the $40 airport security
surcharge on arriving and departing passengers at the
Banjul International Airport that the government is poised
on putting into effect on 1st October, 2019.
We have seen recently such tender violations in the SEMLEX case, the CHINA BRIDGE AND ROAD CORPORATION and now with the SECURIPORT contract for the provision of border security services at will impose a $20 security tax on arriving as well as departing airline passengers passing through Banjul International Airport. This means that every tourist visiting The Gambia will see an additional cost of $40 every time they visit the Gambia.
There is no evidence that the award of the contract to SECURIPORT was tendered. And if exempted, no proof exists that the rationale for the exemption. The lack of transparency in the tender process almost always results in the wrong company being selected at greater cost to the public treasury than when the project is tendered in an open and transparent fashion.
The impact of the proposed tax is devastating because the demand for air travel is highly sensitive to air ticket prices as well as incomes. For instance, a 10% increase in the ticket price can result in a 10% reduction in the demand for travel for international long haul leisure flight (elasticity -1.0). It is therefore important for government to plan well in advance for a series of consultations and to engage an air travel consultant, if necessary, with stakeholders, airlines, tour operators, hotel owners and local tourism-based enterprises.
Obviously, the process that the government adopted lacked transparency and was deliberately exclusionary. Not only were tour operators excluded from the process that resulted in the border security tax, even government departments such as the Ministry of Finance responsible for all fiscal matter of the Government, the Ministry of Works which is the line ministry of the Gambia Civil Aviation Authority responsible for managing Banjul International Airport and as far as be ascertained, the Tourism Board.
As we have reported recently, the contract was negotiated and signed by the Minister of Interior, Director General of Immigration and the Cabinet Secretary for Government and The General Manager of SECURIPORT (Gambia). Conspicuously absent from the tender award and negotiations process were the Ministry of Finance responsible for all fiscal matters of the Government, the Ministry of Transportation, Works and Infrastructure, Gambia Tourism Board and the Gambia Civil Aviation Authority. It is evident that government's preferred process lacked transparency and was deliberately exclusionary.
The Head of Operations of Meeting Point, The Gambia, a subsidiary of Germany's FTI one of the world's largest tour operators regrets to confirm that there was no consultations and as far as he can ascertain no one from the industry was involved in the process of assessing the new tax. According to Meeting Point, "not even Gambia Tourism Board and the Gambia Hotel Association were consulted prior to publishing this [meaning the tax] and as far as I am informed, are adamantly opposed to this border tax."
The subsidiary of FTI believes that the border tax will probably discourage many from travelling to The Gambia for the following reasons: (i) the demand for air travel is price sensitive (ii) for many tourists, especially from new markets, Gambia is often not the first choice and when the price is high, prospective visitors will choose another destination and (iii) the very existence of what is labeled as a "security tax" gives the feeling of insecurity i.e. the feeling that The Gambia is an insecure place; its a bad PR job.
FTI finds the introduction of such a huge tax increase in the middle of the season is something unheard of in any of the markets they operate in. Although FTI has not altered its plans for the Gambia, the same cannot be said of some of its partners where the Gambia is a new product. In such markets, they are seriously considering withdrawing because the manner in which the tax was being introduced suggests that the Gambian market is unpredictable and cost planning difficult.
Imposing such a tax will affects FTI's plan to promote summer tourism because, unlike winter months, there are many destinations Europeans can select from at that time of the year.
The mere fact that government is thinking of implementing a security tax "may deter foreign investments because it shows how unpredictable the government can be and gives the impression they focus on short-term potential gain instead of long-term sustainable growth for the benefit of the Gambian economy and its people," the Head of Operations opined.