Pvt airlines awaiting subsidy fund

By B. M. Dahal

Private airlines are ‘in the process’ to initiate flight operations to remote and service sectors after the government’s decision to revise the upper and lower limits of airfare of the domestic sector. Now, they are waiting for the government to set up a fund to subsidise the flights to the remote areas.

Medini Prasad Sharma, Director General of CAAN, said that the authority has already approved the airline schedules for operating flights in the service sector. Besides, it has also considered the per hour cost, increased insurance premiums and other expenses. "We will allow them to fly to the remote areas once they submit us their schedules."

The government has taken the decision to help sustain the aviation industry at a time when the country is seeing a continuous downturn in the arrival of tourist. Air operators, who were demanding hike in airfare for the last several years, have welcomed the government’s decision since it would help in the sustainability of the airline business.

Under the new provision, the government has classified the destinations into three groups - tourist sector, hub-to-remote sector and others. "We are all set to fly to the hub-to-remote sector and are waiting for the government’s decision to set up a fund to subsidise flights to such areas," says Bijay Shrestha, General Manager of Yeti Airlines.

Shrestha, who is also executive member of Air Operators Association of Nepal (AOAN), has his airline got its schedules approved by the Civil Aviation Authority of Nepal (CAAN) as of May this year to operate flights from hub destinations to the remote areas.

The airline has taken permission from CAAN to operate flights on the Biratnagar-Taplejung, Nepalgunj-Dolpa, Nepalgunj-Sanphebagar routes. "But we will be unable to fly on such routes unless the government establishes a fund to subsidise flights," he says.

He also says that the aviation industry is in a critical position as the occupancy rate and utilization of aircraft have decreased but the expenses have increased.

"Now we have to pay more insurance premiums and various kinds of taxes and fees to the government," he says.

The government is also said to be working towards the direction soon so as to encourage the private airlines to fly to the remote areas.

Bikash JB Rana, President of AOAN and Executive Chairman of Fishtail Air, says that the increased fare cannot significantly contribute to the sustainability of the aviation industry. "This, however, has helped to flow the cash."

Rana further says that the airlines have asked the government to take aviation industry, which is the basic infrastructure for the overall development of the country including tourism, sensitively.

"We have applied for bank loans to run the airlines at such a difficult period. We have received assurance even from the government," he says.

The government is likely to take a decision regarding providing financial support to the airlines soon.

With the government’s adoption of the open air policy in the early 1990s, the number of airlines increased considerably. At present, there are around 35 aircraft and 16 helicopters under different airline companies.

Another air operator Shivendra Bahadur Basnet, Managing Director of Mountain Air, however, emphasizes the need for the government to strictly control the commission of the airline tickets in order to run them in a sustainable manner.

"I think, the present air fare will be helpful to sustain the aviation business, to some extent. So, the government must develop mechanism to check the unhealthy competition among airlines," Basnet says.

As per the government’s new regulation, airlines are allowed to give only four and nine per cent commission to the agents in the local fare and dollar fare respectively.

"If it is implemented properly, we can survive, at least, for the time being," he says.

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