Tour Firms Feel Bite of Fuel Levy

By Godfrey Tung;wet Posted 15 July 2006 @ 02:35 pm EET     Print     Reprint     E-Mail     Comments

Nairobi (IBTimes.com) - Tour operators are already feeling the pinch of higher fuel prices, barely a month after the Government raised the Road Maintenance Levy by Sh3.20 per litre of fuel.

Kenya Tour Operators Association (Kato) chief executive Fred Kaigua said profit margins were being eroded as tour firms were unable to pass on to clients the extra cost following the changes announced in this year's Budget by Finance minister Amos Kimunya.

Mr Kaigua said Mr Kimunya did not consult the sector prior to increasing the levy, and tour firms cannot change quotations they forwarded to clients after just six months.

Tourists already in the country, and those due to arrive, booked their travel using the quotations.

He said the Government could alleviate the problem by ensuring that the funds raised from the levy were properly used in repairing roads to help them reduce costs caused by constant breakdown of vehicles.

The increase by the Kenya Wildlife Service (KWS) of entry fees to Aberdare, Nakuru, Meru and Nairobi national parks for adult foreign tourists to Sh2,900 ($40) with effect from July 1 has also not helped. Children and students from abroad visiting the parks are paying Sh1,460 ($20) and Sh730 ($10) respectively to enter national parks, forcing tour firms to bridge the gap of current charges and quotes issued earlier to clients, said Mr Kaigua.

Meanwhile, 10 per cent of money raised from Emergency Rescue (ER) Safari cover for tourists launched by Kato and Africa Air Rescue (AAR) Action, will support the safety and communication centre set up by the Kenya Tourism Foundation (KTF).

The safety centre, manned 24 hours a day, currently offers tourists updates on security, health, roads and travel advisories.

Mr Kaigua said Kato expected tourist arrivals to increase and lift the sector's earnings to Sh60 billion this year, from about Sh50 billion for 2005, due to aggressive marketing.

Kenya is well positioned to reap the benefits of international tourism that have now entered a more stable phase thanks to sustained demand.

International Civil Aviation Organisation (ICOA) medium term forecast expects traffic to rise to about 3 948 billion passenger per kilometer performed (PKPs) in 2006, 4 177 billion PKPs in 2007 and 4 411 billion PKPs in 2008.