Increased airfares

Domestic airfares are poised to jump by ten to forty percent. Only a cabinet decision is now awaited. Private sector airlines operating in Nepal have been lobbying the government for such an increase, citing a considerable surge in operating costs, dwindling tourist inflows, the depreciation of the Nepalese rupee, the imposition of VAT and various other factors. The government is however going to leave the fares to the remote areas unchanged and, furthermore, the private sector airlines are to be issued strict directives to operate flights to remote areas at minimum fares. Subsidies for airfares on such routes are also being mulled. The government levied increased charges across the board through a finance ordinance recently to help pay for the ongoing counter-insurgency operations by the security forces. This is now beginning to have a knock on effect on the economy. Higher rates of customs duty is one of the reasons given by airline operators for seeking an increase in airfares. Before this we saw the reallocation of budgetary resources from developmental to regular expenditure. All that is part of the price this country is paying for safeguarding a floundering democracy from assaults by the votaries of an extremist ideology. The imminent hike in airfares can be seen as but the latest in the economic squeeze we all are facing. This was preceded by the Voluntary Disclosure of Income Scheme which is still in the process of being implemented. However, there is a danger that the straitened economic exigencies will become a blanket excuse for all kinds of tinkering with the economy and the price structure. One has reason to believe that there is indeed an element of this in the proposed restructuring of airfares.

For ironically, the airfare hike will come at a time when the price of oil has gone down in the international market, including in neighbouring India. In the past the government has invariably used global oil price hikes as a handy excuse for jacking up the cost of petroleum products to the Nepalese consumer. When pressed on the logic of this argument, it has not shied away from reassuring the public that should the global price of crude climb down, the savings would be passed on to consumers in reduced prices of oil in the domestic market. But it has yet to live up to that reassurance. Given that kind of track record, it is natural to assume that the latest hike in airfares is a poorly disguised attempt to subsidize gross inefficiencies and unjustified levels of overhead in the Nepalese aviation industry. This includes the private sector airlines, which have been able to cut corners and compromise on international safety standards to shore up sagging bottom lines. As for the national flag carrier RNAC, which still operates in the domestic sector, it has long been synonymous with corruption. The only reason it is still kept flying in the public sector is the kickbacks it yields to the powers that be. So, the multiple excuses trotted out by the authorities for the latest dose of bitter economic medicine that it has meted out to the public leaves one unimpressed.