WFP/UNHAS, under the stewardship of the UNHAS Board Chaired by WFP with administrative and logistics support provided by WFP, is established as a UN interagency common service to provide safe, efficient, responsive and cost effective passenger and cargo air transport services for humanitarian and development agencies and their implementing NGO partners involved in the rehabilitation and reconstruction of Afghanistan.
Between 2003 and 2005, 180,000 passengers utilized WFP/UNHAS services. The general consensus of WFP/UNHAS Board after consultation with the donor community and international clients is that the service is needed and should continue due to the lack of safe and reliable ICAO compliant operators.
At the consultation with donors held on 01 Nov 05 in Kabul, the local representatives of the donor community suggested that the funding strategy could move from donor subsidized to full cost recovery.
WFP/UNHAS has taken the following steps to significantly reduce the subsidy required to sustain the service by:
- increasing the reimbursable cost/seat;
- cessation of low-yield routes;
- redesign of route structure and schedule to facilitate increased sector passenger yield through efficient “hubbing”
- reducing fuel consumption and increasing payload;
- installation of a computerized passenger reservation and revenue accounting (PRA) system to reduce workload and overtime cost.
With the progressive implementation of the aforementioned cost-reduction measures, the proposed budget for SO 10514.0 is US$16,829,331. Expenditure is expected to be recovered through miscellaneous income in the form of ticket sales and reimbursement from provision of services to UNAMA.
In view that the short/medium term passenger load is unpredictable due to the recent increase in fares, the uncertainty about donor funding of international development programmes for Afghanistan and the overall UN presence, it is further proposed that whatever funds remaining as at 31 Mar 06 in SO 10163 (estimated at US$ 2.1 million) be transferred to SO 10514 and be used as operating capital for SO 10514.
Current revenue derived from ticket sales show a monthly revenue/expenditure deficit of between US$ 100,000 and US$ 150,000 per month. Should this trend in deficit continue, the operating capital will be sufficient to cover 12 months of operation