Following a year-long home work, Nepal Airlines inks its largest ever deal to buy two jets

April 23, 2017, 10:14 p.m. Published in Magazine Issue: Vol.10,No 17, April 21,2017 (Baisakh 08,2074)

Where there is a will, there is a way. This is what Managing Director of Nepal Airlines Sugat Ratna Kansakar has shown. Struggling for a year to acquire wide body aircraft for Nepal’s national flag carrier, MD Kansakar has finally inked a deal that will get it two wide bodies within two years.

With three narrow-body aircraft in operation now, Nepal Airlines has been flying regionally. The availability of wide-body aircraft will help the national flag carrier expand its wings to new destinations in South Korea, Japan, Australia and Saudi Arabia while also reducing the airfare.

As Nepal is planning to bring two million tourists by 2020, adding two aircraft in the fleet of national air carrier will be significant. Flights by Nepal Airlines have already brought the prices in certain sectors like New Delhi, Mumbai and Bangalore down. 

Nepal Airlines signed a final deal to purchase two Airbus passenger jets, in what is billed as the largest-ever such deal in Nepal's aviation history.

Managing Director Kansakar signed the deal with Deepak Sharma, representative of AAR Corp, the supplier firm, for purchasing two wide-body jets in the A330-200 series, at a price of US $209.6 million. According to a press release issued by NAC after the signing, AAR Corp, a US-based Company, will deliver aircraft to NAC.

NAC agreed to release 35 percent of the price immediately after the deal, as part of a first installment payment. Following the deal, the national flag carrier will have a total of five long-range planes in its fleet by March 2018, enabling it to serve new destinations such as in South Korea, Japan, Australia and Saudi Arabia. The number of seats in the new jets will range from 250 to 280, according to NAC.

NAC currently has one Boeing 757-200 and two narrow-body Airbuses, and flies to eight destinations.

NAC sent US $ 1 million to the company as a commitment fee in January. “The new jets will make Nepal a cheaper destination as wide-body aircraft can mean relatively cheaper airfares,” said MD Kansakar. The government is standing the guarantor for the new aircraft purchase, which is aimed at promoting tourism.

The procurement process for the wide-body jets started in September. Proposals were invited from aircraft manufacturers, airlines, aircraft leasing companies and bankers and the US Company was picked out of 10 international companies. 

The Employees Provident Fund has already committed a loan of Rs. 25 billion for the Airbus purchase. But the final deal on financing is yet to be concluded as they still have to agree to amicable interest rates. NAC has already borrowed Rs 10 billion while purchasing two Airbuses with 158 seats in 2013, at an interest rate of 12 percent. 

The purchase will herald a new era in the history of civil aviation in Nepal as the national flag carrier widens its wings

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