India Shining

Posted by: on Jan 10, 2005 | No Comments

The evidence is staring us in our face. Government is inefficient. Get it out of our lives. Restrict it. Let it perform only its core functions. We will benefit greatly.

Consider the opening of the skies between New Delhi and Kathmandu to private airlines. The exclusive privileges of RNAC, IA and Druk, have been revoked – hopefully for ever. We now have Jet, Sahara, and Cosmic offering us flights as well.

As would be expected, fares have crashed, service has improved, and travelers have a much wider choice as to the time they leave or arrive in Kathmandu. The benefits are going to the travelers, travel agents, hotels, casinos, and others associated with the tourism industry of Nepal.

Economy airfare to Delhi used to be Rs.13,000. Not any longer. All sorts of offers are available. It is easy to travel for Rs.9,600 if you are alone, and if you are in a group, you may pay just Rs.8,000.

If on average 500 travelers use these flights daily, and they now have to spend Rs.1,600 less on their tickets, that means Rs.800,000 a day is being put back into the pockets of the traveling public. On a yearly basis commuters will save Rs.300 million on their travel to Delhi alone. One can now have some idea of how much government monopolies, restrictions, and licensing requirements are costing the people of this country.

The savings have seemingly come out of thin air. Everyone is smiling. Consumers are paying less despite increase in the general price level. Private airlines are happy otherwise they would not have so eagerly commenced operations. Everyone related to the travel trade is ecstatic hoping that additional travelers will mean more money in their pocket.

The only loss has been that of ‘inefficiency’. Bloated government bureaucracies manning RNAC and IA now have to compete and this competition is making them improve too. Those in the travel trade tell us of how the arrogance exhibited by the staff of these airlines has been replaced by a new found humility.

The only question is, why did it take so long? These steps could and should have been taken much earlier. We had enough examples of the success of ‘open sky policies’ in the world.

Let us take the US. Almost 13 years ago, on December 10, 1991, this is what was published in the International Herald Tribune under the heading “Deregulation is working”.

“… deregulation has mostly done just what it was supposed to do, giving most air travelers more flights, more convenient schedules and substantially lower fares.

… For every Midway or Pan American that has departed, a USAir or Delta has taken its place.

…the number of airlines competing on typical routes has risen by one-third under deregulation. That is why fares are now 20 per cent below what the government would have set under its old formula.

… In a new study, Robert Gordon of Northwestern University shows that hub-and-spoke schedules have added more nonstop flights than they have eliminated. And there are more convenient options for nearly every traveller.

…the Brookings scholars conclude that travelers are better off, to the tune of tens of billions a year in lower fares and added convenience.”

It is apparent that no business should ever be granted monopoly or semi-monopoly privileges. Competition benefits us and it is only a matter of time before the benefits spread to all the people of a country.

The road ahead is clear. There should be no further hesitancy or partial steps. Open the skies completely. Allow any airline from any part of the world to come to Nepal. We need more flights and more competition on every route. Let any airline which is willing to fly from Kathmandu to any place on earth do so.

Further privatize all airports and allow them to cater to not only domestic airlines but to international ones as well. Allow international airlines to fly on domestic sectors too and open the domestic airline business to foreign investment.

The benefits to the people of Nepal would not be in millions of rupees but be in billions.

The Himalyan Times

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