Should public transport fares be increased?

Baku/26.09.22/Turan: Passenger transportation companies have applied to the Ministry of Transport with a request to increase the fare. In a collective appeal to the leadership of the country, 19 private transport companies that carry out most of the passenger traffic in the city of Baku and nearby villages say that they were not provided with any assistance from the 280 million manats allocated by the state in connection with the pandemic in 2020 in order to ensure the financial stability of transport companies.

Are  companies carrying passengers, right?

Economist Natig Jafarli comments on the problem in the “Difficult Question” program.

In connection with the pandemic, funds were allocated from the state budget in order to ensure the financial stability of passenger carriers, he said. “However, the great part of these funds went to AZAL, its subsidiaries, the Metropolitan and “BakuBus”. In a word, all state-owned companies received subsidies. AZAL received the most - in total, about AZN 210 million. But the private companies received nothing. Therefore, the heads of private companies are absolutely right, since in the decision of the Cabinet of Ministers dated April 4, 2020 No. 135S on providing assistance to transport workers in connection with the pandemic, the subsidy was intended for all transport companies,” the expert said.

According to Jafarli,  such attitude to private companies is a gross violation of the rules, a manifestation of a negative attitude towards the private sector. The result of this attitude is the lack of accountability of state-owned enterprises.

“So far, AZAL has not reported why it is operating at a loss, how much subsidies it has received? Although the number of flights decreased during the pandemic, AZAL worked and everyone knows about the exorbitant prices of this airline. Because of these prices, they by definition cannot be unprofitable. Here, private companies are 100% right,” the economist noted.

Jafarli believes that Azerbaijan needs centralized management of the urban transport system, as is customary in other countries.

“The city mayor's offices deal with urban transport in them. They have various programs, differentiated approaches to different social strata (one for students, another for pensioners). In addition, the cost of a day pass in these cities differs from the cost of a monthly pass. Subscriptions are for a month, for 6 months, for 1 year. Accordingly, the cost of a one-time trip for these subscriptions is different. It is obvious that the cheapest one-time travel is for an annual subscription,” he explained, adding that there is none of this in Azerbaijan.

“We do not have the concept of management from a single center, but there is the dominance of the state. Since the Metropolitan and “BakuBus” are state-owned companies, their main goal is to improve their material and technical base at the expense of the state budget. The private sector supports itself: it buys buses, repairs them at its own expense, pays for their parking, etc.,” Jafarli stressed.