MIAT will not alter ticket prices

Members of the Standing Committee on Economy have reported issues with the MIAT Mongolian Airlines company.

The airline operates international scheduled services to Asia and Europe.

However the airline spends a long time and much fuel on the European scheduled services. According to MIAT CEO Ts.Orkhon; “buying fuel in Mongolia is too expensive in contrast to other countries. 

For instance, airplane fuel is 1500 US dollars per ton in Mongolia, while it is sold at 1050 US dollars in the market. If the tax value is added it would total at 1650 US dollars. Using these figures the cost of airplane fuel is 40 percent higher than the standard market price. The airline loss is estimated at 73 billion MNT in fuel costs in 2000-2010.” Parliament once discussed the issue but it still thinks European, particularly German, scheduled flights should continue despite the loss. On the other hand, the introduction of three private air carriers operating in the sector has created competition. But officials say that if the Government does not focus on it, there could be difficulties in flight safety. 

Even though MIAT potentially can carry 1.2 million passengers a year, the airline only fills 30 percent of this capacity. It is all about unbalanced demand and supply. The Standing Committee also announced that private air carriers had a 20 billion MNT loss through lack of using potential capacity. 

MIAT CEO Ts.Orkhon said that: “If we cut prices we will see great loss. It is not easy to cover the deficit. Tough state and private carriers can operate in the sector and passengers benefit from lower prices and good services. But on the other hand flight safety would be at risk if foreign companies dominate in the sector. So state owned and private companies can jointly operate with five or six airplanes. In my opinion it is right to nationalize MIAT.”

SOURCE OF THIS ARTICLE : News.mn