NEPAL AIRLINES: Flying With Hope

After receiving a new aircraft in 28 years, the hopes of Nepal Airlines to remain in the domestic air market increase

May 23, 2014, 5:45 p.m. Published in Magazine Issue: Vol: 07 No. -22 May. 23- 2014 (Jestha 9, 2071)

Nepal Airlines, which was on the verge of closure, got a new lease of life following the arrival of Chinese MA60 aircraft last week. Just after the arrival of the new aircraft, Nepal Airlines also advertised for promotional fair reducing by half the price currently charged by private airlines.

Although Nepal Airlines has made it clear that the current fare is just promotion, it also shows the possibility of price war. Two main private airline operators Buddha Air and Yeti Airlines have already expressed their concern over the promotional fair of Nepal Airlines.

According to experts, the arrival of new aircraft for Nepal Airlines is likely to hurt Buddha Air which has been monopolizing the market in major trunk routes. Buddha Air, which secured two French made aircraft with borrowing money from International Financial Corporation (IFC), is already in trouble due to increasing competition.           

After intensive discussions and controversy, the Chinese Modern Ark 60 (MA60) aircraft landed on April 27 at Tribhuwan International Airport and was handed over to Nepal Airlines Corporation (NAC). The much-awaited aircraft was welcomed by NAC representatives playing traditional Nepali musical instruments.

According to officials at NAC, although the aircraft was scheduled to be brought in the country on Friday April 25, the date was postponed due to some technical and certification problem.

As the first aircraft arrived, another one would be there shortly. After this the national flag carrier will have two aircraft for domestic operations of MA60.

The MA60 is a part of loan and grant agreement worth Rs 6.67 billion signed by Chinese government with Nepal last year. The agreement was signed regarding the procurement of six aircraft-two 56 seat MA60 and four 19-seat Y-12e.

Tourism Secretary Sushil Ghimire, Chinese Ambassador to Nepal, Wu Chuntai and senior officials of the NAC were there at the TIA to receive the aircraft.  For the ailing NAC, the arrival of MA60 means a lot. Hard hit by two crashes in less than a year, the national flag carrier hopes to revive its domestic operations with a revamped fleet after its Chinese-made aircraft on order are delivered. The national flag carrier's domestic fleet consists of a single airworthy Twin Otter aircraft.

NAC, which has been incurring an annual loss amounting to Rs 170 million, hopes for a revival after the delivery of a total of six Chinese-made aircraft-two MA60 and four Harbin Y-12--by September-end this year. The first of the Y12e planes is scheduled to arrive on June 30 and the rest to be delivered by September 30.

NAC had signed a commercial agreement with AVIC International Holdings, a Chinese government undertaking, to procure six aircraft in September last year.  As per the agreement, China had pledged to provide a 19-seater Harbin Y-12e and a 58-seater MA60 turboprop in grant and four other aircraft-three Harbin Y-12e and one MA60-on soft loans.

The MA60 will be used on Biratnagar, Pokhara, Bhairahawa, Nepalgunj and Bhadrapur routes. The smaller Y12e will operate on remote sectors, including a number of tourist destinations. Experts said that Harbin Aircraft Manufacturing Corporation that produces the Harbin Y-12 is an alternative to the Twin Otter.

NAC has planned to put the aircraft into service starting from next week. “Initially, the plane will be used on Dhangadhi, Bhairahawa and Biratnagar routes,” said NAC Managing Director Madan Kharel. After investigating its technical status, the Civil Aviation Authority of Nepal (CAAN) is expected to give Air Operator Certificate in a week to operate the plane.

“The addition of new planes will enable us to increase our flights on trunk routes too. This will enhance our position in the domestic aviation market,” said Ram Hari Sharma, spokesperson for NAC. “We will announce our fares for new routes within 2-3 days.” 

With the MA60 joining its fleet, Sharma claimed NAC could offer airfares at 20-25 percent lower than that of the private airline operators. “However, we are yet to decide on that.”

With launching of operation by Nepal Airlines, customers have now one more choice to fly. According to experts, it is likely to reduce the current air fare in domestic areas. Indian air operators have monopoly in New Delhi sector due to lack of Nepal Airlines flights. After the arrival of its first aircraft in April, there will be reasonable fare for the passengers in the domestic sector.

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