Govt to seek donor support to expand NAC domestic fleet
KATHMANDU, AUG 15 -
The Ministry of Tourism and Civil Aviation (MoTCA) through the Finance Ministry has initiated the process of requesting donors to get small aircraft for the Nepal Airlines Corporation (NAC). The corporation last week had requested MoTCA in this regard.
MoTCA on Friday approved the NAC’s proposal at a minister level decision and decided to hold discussions with the Finance Ministry in this issue.
After being unable to expand its domestic fleet, the ailing national flag carrier, had knocked MoTCA’s door to help it generate donors’ assistance for adding more planes.
NAC requested the line ministry last week to arrange five 17-19 seater aircraft through donor funding to enable it to serve remote sectors under its restructuring drive. “The donor community will be requested through the Finance Ministry and Ministry of Foreign Affairs after holding discussions on the NAC’s proposal,” said MoTCA Secretary Ganesh Raj Joshi.
Although the process is in its initial phases, Joshi said the donor community could be positive on the NAC’s proposal that seeks to utilise aircraft to serve remote sector, but not for commercial operation.
In the past, the Canadian International Development Agency had donated seven Twin Otters to NAC between 1972 and 1979. Among them, three are in operation, two out of operation, while two others can be put back in service after maintenance.
The airline, which is suffering heavy financial losses and has a reputation for poor service because of regular flight cancellations and delays caused by its ageing fleet, is also facing fierce competition from private players.
Domestic air passenger movement saw a robust growth of 12.83 percent to 1,554,701 in 2010 against 1,377,868 in 2009. However, NAC received a mere 47,081 passengers in 2010, down by 11.84 percent.
NAC started to lose its market share when domestic aviation market was liberalised in 1992 and emergence of new competitors—Necon Air, Nepal Airways, Everest Air, and Himalayan Helicopters—by 1997 accounted for 70 percent of Nepal’s domestic air traffic. Currently, there are eight airlines, including NAC, and five helicopter services operating from Kathmandu.
Corruption and mishaps added more economic constraints to NAC’s efforts in maintaining its fleet over the last two decades. Hemant Arjyal, an aviation analyst said requesting for donors’ support under its restructuring drive was not a good idea.
“Political interference has been hindering NAC’s growth, and the government should be more responsible to make the corporation more professional. Although, donors are focused on the country’s social sector, their priority could be least in the restructuring plan of the national flag carrier.”
NAC officials attributed these economic constraints to serving remote sectors at reduced fare. “The government does not allow NAC to hike fares in the remote sector. Low seat occupancy was another reason for its losses,” said Raju Bahadur KC, spokesperson for NAC.
With more losses in remote areas, private air operators are also reluctant to serve remote destinations where the operating cost is higher than the fare.
KC said NAC is incurring Rs 50 million losses annually from each aircraft serving the remote sector. “Currently, the carrier has three Twin Otters serving domestic destinations which are being used maximum in remote sectors.”
NAC has floated the proposal to MoTCA due to its deteriorated financial condition and inability to afford new aircraft.
Source: Kantipur
The Ministry of Tourism and Civil Aviation (MoTCA) through the Finance Ministry has initiated the process of requesting donors to get small aircraft for the Nepal Airlines Corporation (NAC). The corporation last week had requested MoTCA in this regard.
MoTCA on Friday approved the NAC’s proposal at a minister level decision and decided to hold discussions with the Finance Ministry in this issue.
After being unable to expand its domestic fleet, the ailing national flag carrier, had knocked MoTCA’s door to help it generate donors’ assistance for adding more planes.
NAC requested the line ministry last week to arrange five 17-19 seater aircraft through donor funding to enable it to serve remote sectors under its restructuring drive. “The donor community will be requested through the Finance Ministry and Ministry of Foreign Affairs after holding discussions on the NAC’s proposal,” said MoTCA Secretary Ganesh Raj Joshi.
Although the process is in its initial phases, Joshi said the donor community could be positive on the NAC’s proposal that seeks to utilise aircraft to serve remote sector, but not for commercial operation.
In the past, the Canadian International Development Agency had donated seven Twin Otters to NAC between 1972 and 1979. Among them, three are in operation, two out of operation, while two others can be put back in service after maintenance.
The airline, which is suffering heavy financial losses and has a reputation for poor service because of regular flight cancellations and delays caused by its ageing fleet, is also facing fierce competition from private players.
Domestic air passenger movement saw a robust growth of 12.83 percent to 1,554,701 in 2010 against 1,377,868 in 2009. However, NAC received a mere 47,081 passengers in 2010, down by 11.84 percent.
NAC started to lose its market share when domestic aviation market was liberalised in 1992 and emergence of new competitors—Necon Air, Nepal Airways, Everest Air, and Himalayan Helicopters—by 1997 accounted for 70 percent of Nepal’s domestic air traffic. Currently, there are eight airlines, including NAC, and five helicopter services operating from Kathmandu.
Corruption and mishaps added more economic constraints to NAC’s efforts in maintaining its fleet over the last two decades. Hemant Arjyal, an aviation analyst said requesting for donors’ support under its restructuring drive was not a good idea.
“Political interference has been hindering NAC’s growth, and the government should be more responsible to make the corporation more professional. Although, donors are focused on the country’s social sector, their priority could be least in the restructuring plan of the national flag carrier.”
NAC officials attributed these economic constraints to serving remote sectors at reduced fare. “The government does not allow NAC to hike fares in the remote sector. Low seat occupancy was another reason for its losses,” said Raju Bahadur KC, spokesperson for NAC.
With more losses in remote areas, private air operators are also reluctant to serve remote destinations where the operating cost is higher than the fare.
KC said NAC is incurring Rs 50 million losses annually from each aircraft serving the remote sector. “Currently, the carrier has three Twin Otters serving domestic destinations which are being used maximum in remote sectors.”
NAC has floated the proposal to MoTCA due to its deteriorated financial condition and inability to afford new aircraft.
Source: Kantipur
