Taliban Discovers The Limits Of Islamic Airline Economics

Timur Kurans 2011: The Long Divergence reveals that the Mideast countries who have understood Islamic economic stricture most widely have had the best economic performance, while strict adherence with bans on interest holds back prosperity.
As it deals with international flight service from Kabul, the Taliban is learning a hard lesson about Islamic economics. They have moved from being a rebel force to managing institutions of governance. Scarcity is caused by price controls.

Since the Taliban takeover, Pakistan International Airlines was the only international airline to offer regular flights from Kabul.

It is difficult to operate in Kabul. It's also very risky. They are subject to high insurance surcharges.

Some cases have seen flight prices rise more than 10x over levels when the previous government was at power. The U.S. military has provided stability.

The Taliban ordered that the airline lower its prices by at least 90% to return to their earlier levels.

The airline responded by resuming its Kabul scheduled service.

Abdullah Hafeez Khan (PIA spokesman) told the AFP news agency that our flights were often delayed due to the unprofessional attitude by Kabul's aviation authorities. According to AFP, a source from the airline said that Taliban officials are often rude and even physically assaulted staff members. In a statement, the Afghan transport ministry stated that the prices for the route should match the conditions of a ticket prior to the victory of Islamic Emirate. Otherwise the flights will be stopped. It encouraged passengers to report any violations.

It is important to see the early Taliban experiences as a stark rebuke of populism's politics. They want to win even though they struggle to maintain access to electricity. However, their ability to do so is limited by the fact that pricing and scarcity aren't just cabals of powerful interests against the people but an economic reality created by the Taliban.

A foreign airline that serves Kabul has to pay a premium. Or they will not be able to provide air service at a sufficient price to fill up a plane and both pay higher costs than average returns. Air service will be less if they have to raise costs or limit their revenue.

Or, to put it another way, if you lose the arguably worst airline in the entire world because it is state-backed and controlled by a political system that has been supportive of your revolution, then you are doing something wrong.

(HT: Lets Fly and Live!