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Airline Competition Policy in Nepal
Working paper, Project report
Steven Morrison
June 1992 |
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| The United States Agency for International Development Mission in Nepal, through its contract with the IRIS Center at the University of Maryland (Institutional Reform and the Informal Sector) asked me to advise the Department of Civil Aviation in the Ministry of Tourism on airline pricing policy for the new private airlines. However, because I believe that pricing policy cannot be viewed in isolation from entry policy and subsidy policy, all three of these issues are dealt with below. To summarize my recommendations: Entry into the airline industry and into particular routes should be free. Airlines should be free to charge whatever prices they wish to tourists. If a subsidy for Nepali air travelers is necessary, the government should establish the service standards that it deems appropriate (e.g., flight frequency and fare) and solicit bids from carriers for the amount of subsidy that would be required. Economists today recognize that markets are not perfect. However, experience has convinced most economists that free markets, with their imperfections, are superior to government regulation. |
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| Last updated on: 12/20/2006 |
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