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Future of Aviation business in Nepal

-Dorji Tsering Sherpa

The open sky policy for aviation business implemented 13 years ago needs to be closely analyzed for its progress and development. The government should timely upgrade, amend and implement rules as per the demand of the modern day aviation business. The astounding economic transformation and air transport developments in the neighboring countries should be noted. The need of reliable, safe and regular air transport network system within the country, due to its geographical and inaccessible terrain and limited road, is a fact which needs no further explanation.

During this short period, many airlines came into existence thereby breaking the monopoly of the state owned airlines NAC earlier known as Royal Nepal Airlines Corporation. The tourism industry stagnating at the 100,000 mark before the advent of private airlines saw dramatic number of tourist arrivals during the 1990-1997 which registered the increment of almost four times.  These private airlines such as Nepal Airways, Everest Air, Necon Air, Garud Air, Lumbini Airways, Flight Care, Mountain Air, Manokamna Air, Asian Airlines, and Skyline Airways were successful for a short time but were not able to survive beyond the 5 years of operation. Most failures were associated with fatal air disasters. At present few more airlines are on the verge of collapse. The Civil Aviation Authority of Nepal (CAAN) has sufficient in-depth information and knowledge of the reasons of these airlines failing, crumbling and disappearing from the Nepali sky.
Most common factors in such failures were the involvement of unprofessional men at the top management level, organization planned and based on short-term basis without sufficient long term financial support, business plan based on the assumption of ever increasing tourist arrival with dollar revenue not considering the local business, seeking aircrafts leased on short term paying huge amount for rental and insurance premiums.

The short history of the Nepali airlines has created a bad and bleak image of Nepali aviation businesses in the international market. The few leasing companies willing to lease or sell their aircraft to Nepalese operator demand huge percentage of down payment requiring bank guarantee from reputed international banks making it very difficult for start-up airlines. This is because of the earlier experience of operators defaulting on their payment and commitments. The ugly incidents of some airline operator taking possession of the aircrafts from the owners without paying their dues and similarly owners taking possessions and grounding of their aircrafts for minor defaults by the operator occurs frequently. The crews and engineers of one airline leaving for another with better management and pay is also responsible for the failures.  Such unprofessional and unregulated activities in the Nepalese domestic airlines have incurred huge financial loses and left hundreds of professional marketing accounting and administrative aviation staffs unemployed. The ultimate result is long drawn legal battles in the court between all these parties.

The Ministry of tourism and civil aviation is equally responsible for the failures of so many private airlines and death of many innocent passengers. The civil aviation is an integral and important part of the transportation system of the country that requires very professional officials to constantly monitor and control so as to provide safe and reliable transport. It should act as a facilitator and monitor the operation of airlines to implement rules and regulation based on the experience it has gathered from so many airlines' sad history.

 The following are some of the immediate issues that need serious attention for the development of the aviation business in Nepal.
1:       The issuance of LOI for the operation of airlines on a haphazard manner, by each newly appointed minister without making proper study of the need of new airlines, must be stopped. Demand and supply should be seriously considered. Thorough studies should be made of the investor's capability and their financial backing.

 2:       The AOC (air operator certificate) should be issued to airlines at least with 3 aircrafts of which minimum two should be purchased by the airlines. AOC of those not in operations should be cancelled immediately so as to let others to apply for the same.

 3:       The immediate need of pilot and engineers in the country must be seriously and immediately addressed by opening pilot's training school, flying clubs and engineering academy within the country. Development of skilled manpower should be cost effective and reasonable for the reaches of the mass.

 4:       The practice of increasing the price of ATF aviation fuels by NOC to subsidize and compensate the cost of diesel and kerosene should be stopped. Various layers of tax levied should be revised, freedom of fixing the airfare should be left for the market to decide and restriction on import of aircraft based on age should be reconsidered due to the unavailability of the STOL aircraft suitable for the Nepalese terrain.

Dorji Tsering Sherpa is the Ex-Executive Director of Skyline Airways.

Email: dtsherpa@ntc.net.np

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