Nepal Airlines Corporation (NAC) on Tuesday issued a letter of intent (LoI) seeking world class management consultancy services in a bid to improve its overall performance and better manage the existing operations. The national flag carrier has long been facing criticism for its failure to assure quality and efficiency.

The desired consultancy services include a need assessment and gap analysis of the overall organization and 

subsequent implementation of an overall improvement scheme at NAC, the corporation said. 

As per the LoI, the gap analysis phase would last two months and the performance improvement or the management contract phase would last two years. The performance improvement phase can be extended if required, the corporation said. 

The national flag carrier said that a fleet expansion programme would be executed simultaneously and the consultant would provide assistance and advice for this programme too.

The need assessment and gap analysis would cover NAC’s four departments—operations, engineering, general management and finance. 

The hopeful consultancy company should have successfully undertaken similar assignments in the past 10 years. NAC has given 30 days for potential applicants to submit their LoIs. 

Ram Hari Sharma, spokesperson of NAC, said that they would short list qualifying applicants and call for requests for proposal (RFP) through a bidding process. He said that NAC would estimate the cost of the project after the companies are listed. The Tourism Ministry has written to the Finance Ministry to finance the project. 

NAC moved to induct a foreign management partner after two global companies, Airbus and Lufthansa Consulting, expressed interest in coming aboard.

In March, German-based Lufthansa Consulting and German Aviation Capital had submitted their proposals to the Prime Minister’s Office to provide consultancy and management services to improve the performance of NAC. 

The two companies had proposed overseeing NAC’s major departments besides holding the post of chief operating officer to help the struggling flag carrier.

German Aviation Capital had proposed that if NAC were to sign an agreement with Lufthansa Consulting, it would help the airline finance the purchase of four 

narrow-body and two wide-body jets.

Lufthansa Consulting is an international aviation consultant for airlines and is an independent subsidiary of the Lufthansa Group. Similarly, German Aviation Capital is an aircraft leasing company.

In response to their proposal, the Tourism Ministry had asked the national flag carrier for its opinion. NAC replied that it was not in favour of having a single party for its management takeover plan and moved to call global bids to induct a foreign management partner.

Recently, European aviation giant Airbus expressed its readiness to study the engineering and operation departments of NAC and recommend appropriate measures to improve these key departments.

In July 1970, the then Royal Nepal Airlines Corporation (RNAC) had invited experts from Air France under a programme to improve management, and they handled most of the managerial positions until 1973. In 1972, RNAC acquired its first jet, a Boeing 727, in cooperation with the French carrier.

The government has been considering privatising NAC or bringing in a strategic partner for the last decade. In 2007, it had initiated a plan to hand over NAC’s management to a foreign strategic partner so that it could reform and rescue the troubled carrier. However, the plan fell apart.

Presently, NAC holds a meagre 5.87 percent market share on international routes. The carrier flew 206,430 passengers last year. It serves five international destinations and plans to expand operations to four more destinations, namely Guangzhou, Dubai, Bangalore and Mumbai this year.  

NAC’s share in the domestic market stands at an even more miserable 2.41 percent. It flew 34,978 passengers in 2014. Over the last decade, the number of its international destinations has been slashed from 21 to five.