One factor identified by experts and analysts as significantly accounting for Ghana’s prohibitive domestic airfares is the lack of competition.
This is an indication that the country’s expensive domestic airfares may have less to do with the cost of flying alone and more to do with the level of competition in the market.
With only two major players serving Ghana’s domestic aviation market, passengers have limited alternatives. This concentration gives airlines greater room to maintain relatively high fares because travellers have fewer options when they need to fly between Accra, Kumasi, Tamale, Takoradi and other destinations.
But the experience of the United States offers an interesting lesson for the country to consider. It is emerging that bringing another serious competitor into the market can itself trigger a significant fall in airfares. This is what is popularly described in the accompanying aviation analysis as the “JetBlue Effect.”
What is the JetBlue Effect?
When JetBlue entered routes previously dominated by fewer airlines, average ticket prices reportedly fell by between 17% and 30% and, in some cases, by up to 50%. Existing airlines were also pushed to improve their services and compete more aggressively for passengers.
The effect was therefore bigger than simply JetBlue offering cheaper tickets. A new competitor changed the behaviour of the entire market.
For example, an analysis of the JetBlue Effect cited by The High Street Journal reveals fare reductions of about 27% on the New York–Fort Lauderdale route, 25% on Boston–Washington and 28% on Orlando–Newark following JetBlue’s entry.
The underlying economic principle is that when passengers have only one or two realistic choices, airlines face less pressure to reduce prices. When another airline arrives with additional seats and competitive fares, incumbents have to respond.
What Does this Mean for Ghana?
Ghana’s domestic aviation market presents a similar competitive question. If two airlines are serving most of the market, passengers who consider existing fares too expensive cannot easily discipline the market by switching to another carrier.
However, a third credible domestic airline could change that equation. It could introduce additional seats, new schedules and alternative routes while competing directly on price. Existing airlines would then have stronger incentives to review their fares, increase promotions, improve schedules, and strengthen their service offering.
If the magnitude of the JetBlue Effect were replicated in Ghana, a 17% to 30% reduction in average domestic airfares could materially change the economics of domestic travel.
For an airfare of GH¢1,000, for example, a 17% reduction would bring the fare down to about GH¢830, while a 30% reduction would take it to about GH¢700.
This could make air travel considerably more accessible to workers, businesses, students, tourists and families who currently consider domestic flights too expensive.
Not Simply About Cheaper Tickets
The bigger lesson from the JetBlue experience is that competition can change more than prices. A new airline would add capacity to the market. More seats and potentially more flight frequencies could give passengers greater flexibility while putting pressure on incumbent airlines to retain customers.
Competition could also encourage airlines to improve the overall passenger experience rather than competing on price alone. For many aviation analysts, Ghana’s ambition to develop Accra into a major West African aviation hub depends not only on international connectivity, but also on having an efficient and accessible domestic aviation network feeding that hub.
For other analysts, Ghana’s aviation market needs more than another airline. Simply adding another airline will not necessarily solve the affordability problem. The new carrier would need enough aircraft, financing, reliable operations and access to commercially viable routes to become a genuine competitor rather than a marginal player.
Policymakers would also need to examine the structural costs that influence domestic fares, including aviation fuel, taxes, airport charges, maintenance, financing and other operating expenses.
Ghana may not be able to legislate cheap airfares into existence. It can, however, create conditions in which airlines have stronger reasons to compete for passengers.
The arrival of a third serious player would not guarantee cheaper tickets. But it could force the market to compete harder, and if Ghana were to experience anything close to the 17% to 30% fare reductions observed in the JetBlue examples, the impact on domestic mobility could be substantial.
