Flying on empty

  • Privatisation is a must to steer NAC away from turbulence

Nov 19, 2018-

There was widespread excitement when the news came out last June that the much-awaited Airbus A330-200 of Nepal Airlines Corporation (NAC) had arrived. The procurement process for two wide-body jets actually began nearly a decade ago, and it was marked by corruption charges, parliamentary hearings and imprisonment of NAC’s top brass. Given that, the arrival of the aircraft was described as a ‘game-changing event’, allowing NAC to compete with other international players on long-haul routes in Europe, Japan, and beyond. But experts had warned that should the corporation fail to utilise the new planes prudently and commercially, the national flag carrier could be pushed into bankruptcy. 

A prescient warning. Less than four months after making the largest jet purchase in the history of Nepali aviation, NAC is running out of cash and teetering on the edge of bankruptcy. Although unfortunate, it looks like the national carrier which was on a mission to reclaim its long-lost glory is jetting towards doom.

A statement made public last week by the national flag carrier through a ‘white paper’ showed that the corporation’s monthly cash deficit had reached Rs317.79 million since inducting the first of two long-range Airbus A330s into its fleet. Prior to that, the corporation had a revenue surplus of Rs12.54 million. What’s more, the wide-body jets were supposed to fly to new destinations like Japan, China, South Korea, Saudi Arabia, and Europe. Although air service agreements have already been concluded with these countries, barring Japan, we have not been able to fly to these destinations owing to the reluctance of the airport authorities in the respective countries. In fact, Nepal is in the European Aviation Safety Agency’s aviation safety list. Meaning, all Nepali airlines are banned from flying to Europe because of their weak safety standards. 

NAC is drowning in loans. It owes Rs38 billion to various institutions, and has to pay at least Rs3.5 billion in interest annually. Here’s the problem: We have brought new airplanes, but our governance style remains the same. First, the national flag carrier, instead of looking for pilots for the new aircraft, conveniently followed its traditional practice: Get the planes first and find the pilots to fly them later. As a result, it has at least three planes sitting idle on the tarmac at Tribhuvan International Airport while it frantically looks for capable pilots. No surprises there, proper planning has never been the government’s forte. The second issue is our bureaucratic nonchalance. Hiring and posting irregularities are now an almost universally accepted baseline for nepotism; and these allegations barely escape NAC. Incompetence and nepotism should no longer be a feature at NAC. The operational opacity such omnipotence allows is outright detrimental to the organisation. 

Flying the wide-body jets to the foretold destinations and generating revenue to rescue the cash-strapped airline demands political gumption and salesmanship of the highest order. The significance of improved operations at the airlines cannot be overstated to ensure that the planes keep taking to the skies. To steer Nepal Airlines away from turbulence, privatisation is a must. Unless NAC is turned into a public limited company and shares are floated, creating transparency and accountability, there will be no saving this debt-ridden corporation. 

Published: 19-11-2018 07:29

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