Passengers and airlines to bid adieu

The year embarked with a pesky start for airlines and travellers as they wittingly yet unwillingly waited for a rise in the cost of flying. With hardly any reputable carriers left to operate to and from Pakistan, the country sadly is not a preferred destination for foreigners. With a handful of Turkish, Middle Eastern and Far Eastern airlines and no European or American carriers, Pakistan hosts only a limited number of international airlines. And now, Malaysian Airlines has pulled out its operations from Pakistan, which is a severe blow to the countrys airline industry and the already waning revenues that will jolt a noteworthy number of student, business and tourist passengers. Despite this, the Sindh Revenue Board and the Pakistan CAA seem to be on a path that leads to a further cut in operations. The revision in route navigation and airport charges by Civil Aviation Authority of Pakistan came as a shocker to the already bruised airline industry, particularly domestic and international airlines and the passengers boarding them. Unfortunately, the airlines opposition against the new taxes could only win another 15 days before the expected hike in air fares and charges kick in. The revisions incorporate a structural change in air navigation charges and an increase in passenger service charges by more than double the previous levels. To add to the misery, new charges have also been introduced. Payables to be borne by airlines will witness a rise of around 35 percent in costs, which include not only an upgrade of 155 percent in air navigation charges, but also the incorporation of charges that did not exist before. To add to the ado, international passengers travelling in premium and economy classes would face an increase in passenger taxes of 170 and 240 percent, respectively. Economy class passengers will now have to pay Rs.1,000 more per ticket instead of Rs.500, while premium class shall shell out an additional Rs.2,000 per ticket against Rs.1,000 charged previously. In addition, passenger payables include infrastructural development charges of $6 (Rs.540) and security charges of $2 (Rs.180). On a comparative basis, the airport charges from Karachi rank as one of the highest amongst regional peers with only India and Singapore surpassing Pakistan by 30 and 4 percent, respectively. Other peers lie way below Pakistan, with UAE having 23 percent less airport charges, and Bangladesh and Sri Lanka around 40 percent lower charges. Reservations against the revised airport tax system is ubiquitous as International Air Transport Association (IATA) has also set forth its qualms with regards to the huge cost impact on airlines and the aviation industry as a whole. IATA has also urged CAA Pakistan to withdraw the notice of revision in route navigation and airport charges as it does not follow the rules stipulated by International Civil Aviation Organisation (ICAO). Moreover, these revisions are idealistic given the forecast of a meager 0.8 percent profit margin in 2012 by IATA, going down from 1.2 percent in 2011. From the looks of it, the aviation industry seems set to adopt the dual policy. On one hand, it is seen advising the government to beef up efforts to entice foreign airlines in the country. On the other hand, its actions and decisions seem to be oriented towards the opposite.