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Kathmandu Friday January 25, 2002 Magh 12, 2058.
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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. |
