Airfare subsidy plan in limbo

KATHMANDU, July 21: Rural folks hoping to get air tickets at affordable rates would need to wait a bit longer as the government decision of activating the Rural Airfare Fund (RAF) to subsidize rural air tickets has yet to come into implementation.



A high-level panel formed by the government to resolve the rural airfare dispute had three months ago suggested the government to revive the RAF. The panel had proposed that the government and the private sector proportionately contribute Rs 120 million a year to the fund.[break]



However, private airlines, who were also represented in the panel, are now backtracking from the decision, saying that the panel´s report was compelling private operators for the contribution and that the government was trying to get out of its responsibilities.



Ranjan Krishna Aryal, coordinator of the panel, did not buy the agreement and said both the sides must contribute equally to the fund.



Airline operators, however, are against activating the fund. “We are against activating the RAF. We must explore other sustainable alternatives,” said Shreekant Baral, chief coordinator of the Airlines Operators´ Association of Nepal (AOAN) - the association of private domestic carriers.



He suggested that the government provide subsidy on Air Turbine Fuel and landing/parking fee for airlines operating flights in rural areas.



The fund has remained defunct for the past 10 years. Only the private carriers were contributing to the fund. At the moment, it only has Rs 2 million.



Aryal said they envisaged the Rs 120-million-fund as the committee members felt it would be sufficient to provide subsidy on rural routes as per the old fare structure. Airfare had increased by 56 percent since then.



The panel in its report to the government had also suggested that the government levy certain amount on private carriers on the basis of number of flights and size of aircraft on trunk routes.



However, the report has been gathering dust at the Ministry of Tourism and Civil Aviation. Aryal said they could not forward the report for implementation to the Ministry of Finance because of notes of dissent lodged by the private carriers.



Private operators opine that since they were already providing airfare at concessional rates, it was not fair to rely on them only to activate the fund. “We are operating at least one flight a week at subsidized rates that meet only our operating cost,” Baral added.



Aryal said officials of RAF would soon categorize certain routes as rural routes and fix the number of flights that the operators are required to operate there.

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