Oman to raise air traffic fees as it wrestles with budget deficit

Oman aims to boost revenues by raising tariffs for air traffic through the sultanate in a move that analysts warn could backfire.

Oman’s Public Authority for Civil Aviation (Paca) said it would impose the new tariff as the Gulf country comes under pressure to cut spending and boost taxation because of the weak oil price.

Raising air traffic tariffs could potentially increase Paca’s earnings by 25 per cent, according to the authority’s chief executive Mohammed Al Zaabi. This would subsequently add to the authority’s contribution to the state budget.

“This year we were expecting revenues of 50 million Omani rials [Dh474.6m]. With the new tariff we expect to add around 30 per cent more. We expect another 15m rials,” he told Reuters.

But analysts warn that higher tariffs could encounter opposition from airlines.

“This raises the question if increased charges will put people off from going to Oman or transiting in Oman,” said Will Horton, a senior analyst at the Centre for Aviation (Capa).

“There is some evidence from other countries (admittedly far larger markets) that increased taxes decrease visitors.”

Saj Ahmad, the chief analyst at the UK’s StrategicAero Research, said that some carriers would be displeased by the move.

“We only have to look at the immense backlash the EU faced with its ill-thought-out policy of emissions charges for flights in the EU and there’s a chance that the Omani strategy will backfire,” he said.

“If the Omanis stick to this new but bizarre policy, airlines will simply avoid Oman altogether,” he added.

Etihad Airways, Emirates airline and flydubai were not immediately available for comment.

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