Iran News ...


7/22/03

High Privatization Council mulls Iran Air's privatization

High Privatization Council on Tuesday investigated a proposal for privatization of the Islamic Republic Airliner, Iran Air, IRNA reported from Tehran.

High Privatization Council Secretariat reported that the privatization bid had been scrutinized on the basis of a directive issued by the President's Office.

Minister of Economy and Finance Tahmasb Mazaheri was present at the meeting.

Iran's aviation industry has been complaining of imbalance between costs and revenues over the past couple of years, appealing for permissions to adopt certain measures, including a 50 percent rise in air fares to rls 18,000 from rls 11,000 per seat/hour, to meet the ends.

The price rise policy sparked strong opposition among some groups, condemning the practice as 'illogical and unfair'.

Some 174 MPs in a petition to President Mohammad Khatami last year, urged reconsideration of the joint appeal by Roads and Transportation Ministry and High Aviation Council for the air fare hike in tune with better service quality and quantity, increase in the number of flights, management of flight delays and the like.

The letter had said the hike would not lead to qualitative improvement of air transportation services, making it necessary for the Majlis and the government to reach a logical decision.

A group of lawmakers had earlier appealed for a temporary hold on a unilateral directive by Roads and Transportation Ministry to raise domestic air fares, saying the decision has triggered public dissatisfaction and a fall in demand for air transportation services.

MP from Damavand and Firouzkouh (Tehran province) and member of the Majlis Development Commission Mostafa Khanzadeh last year voiced strong protest at a 50 percent hike in the price of plane tickets, saying the 'unusual and illogical' increase in the fares would definitely have adverse effects on other economic sectors.

Khanzadeh said the commission had rejected the proposal by Ministry of Roads and Transportation, to lower the the price hike to 35 percent maximum.

The Majlis Development Commission then refused to respond positively to the demand for a 50 percent hike in air fares due to inferior quality of aviation services and its contradiction with the Third Five-Year Economic Development Plan (2000-2005).

Some people believe that the government's move to make the price of domestic airline tickets more real and to make the aviation industry profitable and free of subsidy, would have positive results.

There are yet certain other groups who claim that the price hike and efforts to make the airline industry independent of government-paid subsidy will not solve all of the problems and would even have inflationary effect.

There have been rumors of foreign contribution to the industry to save it from becoming paralyzed instead of increasing air ticket prices because the latter move would be an injustice to the vulnerable classes of the society.

A member of the Majlis Development Commission Mehdi Ayati had on January 2 rejected the idea that that domestic airline fares should be raised to match those of international rates, saying it would not make sense given that the Iranians' income level is much less than the world average.

"They (Iranians) earn revenues based on rials and have to spend on products and services based on dollars," said Ayati.

He said currently the average per capita income of Iranians is much less than those in neighboring states, and even in many third world countries.

... Payvand News - 7/22/03 ... --



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