The effect of Aeronautical and Non Aeronautical charges on Airport revenue collection the

Abstract

Relating to the international air transportation industry, today as discordant as those pertaining to Airport charges imposed at international airports. Aeronautical and Non-Aeronautical activities obvious are two sides business. Despite recent globalization and liberalization of the aviation industry, in a large number of countries, it is still owned and operated by governments. International Airports in Tanzania such as JNIA and KIA depend much on Aeronautical charges rather than Non-Aeronautical charges to finance its expenditure which is very risk because if no or few flights operate at the Airport means that no or few revenue will be generated. Commercial airports use non aeronautical sources to generate between 35% and 40% of their revenues. There are only 5 out of 58 airports owned and managed by TAA can fully finance their operations. Different countries focused on the challenges facing aviation sector in revenue collection. Also experience shows that International Airports of Tanzania still using social maximization approach instead of using profit maximization approach in generating airport revenue. Most of Tanzanian Airports fail to finance its expenditure efficiently and effectively. Therefore, this study determined the effect of Aeronautical and Non-aeronautical Charges on Airport Revenue collection at KIA, Tanzania. The study aimed to determine the effect of Aeronautical and Non-Aeronautical charges on Airport revenue collection at Kilimanjaro International Airport. The study used case study design in Kilimanjaro International Airport for the period between2010 to 2019. Secondary data were used collected from the management of KIA. Data were analysed using STATA, SPSS and Excel Software. Multiple liner regression was used for prediction. The findings presented using Tables and figures. The study is relevant to all aviation stakeholders. The study reported the variation in airport revenue collection can be influenced by PSC, LPF, RUF and SCF but less influence with SCF. The MLR model for the outcome observed as ARC = 7.66E+07 + 0.723(PSC) + 0.911(LPF) + 3.676(RUF) - 19.449(SCF). This exposes that passenger service charge, landing & parking fee, rental & utility fee and sales concession fee can be used to predict airport revenue collection at KIA. In case of RUF and SCF to predict ARC also the equation for regression model assumption found as ARC= -1.234E+10 + 22.901 (RUF) - 18.378 (SCF).This model presented R2 of 0. 845 imply RUF and SCF is a predictor of ACR explained by 84.5% with Non- Aeronautical charges but the model is not stable for SCF because of negative value. Besides, the study found significant results on Aeronautical charges to predict ARC. The R Square value of 94.2% with p<0.001 shows the model fitness. The regression model is good predictor presented as ARC =669033627.8 + 0.33 (PSC) + 1.533 (LPF) especially for LPF significant indicated with p=0.037 while PSC found to be insignificant at p=0.508. Hence the institution can use both Aeronautical and Non- Aeronautical charges as it has impact in generating revenue. The study discloses that Aeronautical and Non-Aeronautical charges are significance to explain about airport revenue collection at Kilimanjaro International Airport given that almost all covariates had positive coefficient. Consequently, the Airport authority has to be more carefully on the policy decision on how passenger service charges landing & parking fee, rental & utility fee and sales concession fee can be implemented to increase airport revenue collection.