Friday, May 24, 2013

Indians are forced to be poor.

The government has allowed airlines in India to " unbundle " services which means that they will now be able to charge for each item of service. This was done apparently to bring down the cost of flying by allowing airlines to offer a cheap basic fare and then add a charge for each item of service so that passengers can decide how much they want to spend. We are told that this is the model followed in Europe and the US and is very popular with passengers. But this is India, where businesses make fortunes by gouging customers, in cahoots with politicians who pass laws to make it possible. The much derided Ryan Air will fly you from Stansted Airport in London to Madrid in Spain, a distance of 1263 km, for 31 pounds, to Turin in Italy, a distance of 958 km, for 29 pounds which is around Rs 2400 and to Porto in Portugal, a distance of 1586 km for 31 pounds which is around Rs 2500. Of course it charges for everything, including baggage, blankets, any aids for a baby and food. Last year it wanted to charge 1 pound to go to the toilet but had to drop the idea after it led to an outcry. Air Asia is charging around Rs 10,500 for a return trip from Bangalore to Kuala Lumpur in Malaysia, a distance of 2871 km. Compare it to India where the cheapest ticket from Vadodara in Gujarat to Delhi, a distance of 1028 km will start from around Rs 5,000. For this price you can carry a handbag and 20 kg of baggage and will only get water for free. From now on you will have to pay for every kilo of baggage, Rs 400 for a window seat and Rs 250 for an aisle seat, a charge for checking in at the counter instead of online and will not get a refund if you are unable to travel for whatever reason. Last year Mr Naresh Goyal, Chairman of Jet Airways said that air tickets in India are 300% more expensive than in China. Why so? Because of taxes. In addition to the base fare there is a fuel charge because tax on fuel may go up to 35% whereas other countries levy only 4% taxes. Then there is a service fee, a transaction charge, a service tax, a user development tax and airport tax. All these together can amount to more than Rs 2500, same as what Ryan Air charges to fly you a distance of 1586 km from London to Portugal. And these charges will never go away, they may increase with time. Why do politicians want to make it impossible for citizens to fly? Because they need money to buy 5 luxury planes for Rs 9 billion and 12 luxury helicopters for Rs 37 billion for their own use. Also prohibitive fares force people to travel by train where the government has increased taxes recently. High taxes keep the aam aadmi in place so that they are so grateful for NREGA and Food Security Bill that they will vote for you. Enforced poverty.

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