KATHMANDU, May 14: A high-level panel formed to resolve issues related to airfare for rural routes has suggested that the government revive Rural Airfare Fund (RAF) to give subsidy to rural folks. The fund has remained defunct for the past 10 years.
The committee has proposed that the government and the private sector proportionately contribute Rs 120 million a year to the fund. Earlier, only the private operators used to contribute in the fund.
“After conducting necessary study, we have concluded that at least Rs 120 million a year would be required to provide subsidy on airfare for rural routes,” said Ranjan Krishna Aryal,” coordinator of the committee and joint-secretary of Ministry of Tourism and Civil Aviation (MoTCA).
The amount is expected to be sufficient for providing air tickets to rural folks at the old fare that was last revised in 2006. Air fares have increased by about 56 percent since then.
The fund comprises of representatives from MoTCA, Civil Aviation Authority of Nepal (CAAN) and private airlines operators.
Meanwhile, reduction in number of flights coupled with excessive airfare has been affecting people in rural areas for the past three months.
Though the government and private operators had agreed to operate flights in old fare until the panel submits its report, private carriers are reportedly charging almost five times the normal fares.
The government had retracted its decision of hiking airfare for rural routes, following strong criticism protest from the locals.
The report asks the government to collect levy from private airlines on the basis of number of flights and size of aircraft on trunk routes.
Aryal said officials in the fund will soon categorize certain routes as rural routes and fix the number of flights that the operators are supposed to operate there.
The committee will submit the report to MoTCA, which will forward it to the Ministry of Finance to allocate budget for the fund.
There actually needs to be a complete overhaul of the domestic aviation sector. It is crucial to provide subsidised flights to rural areas, and a strong injection of government cash is necessary. Ideally, subsidised fares should only be available to people who reside in these regions, although it I am not sure how this would work.
For the main inter-city flights there should be a competitive pricing structure as in most other countries, with a wide range of fares acco