October 6: A report along with recommendations submitted by the 'Structural and Managerial Study and Recommendation Committee of Nepal Airlines Corporation' formed under the chairmanship of Nepal Rastra Bank's former Governor Dipendra Bahadur Chhetri, is the ninth of its kind.

The Ministry of Culture, Tourism and Civil Aviation has already received the report of seven such committees, sub-committees, task forces and one report from the International Civil Aviation Organization (ICAO) for the reforms of the flag carrier of Nepal.

However, all those suggestions are gathering dust in the drawers of the ministry. There has been no improvement in the structural and managerial condition of the corporation. The government’s negligence has made it challenging for NAC to survive in the competitive market of airline industry. Passengers are in a dilemma whether to take the service of state-owned Nepal Airlines Corporation or not due to problems with the engine and other glithes during NAC flights.

In the latest example of the poor quality of NAC’s service, a plane flying from Kathmandu to Dammam in Saudi Arabia encountered a problem at 12:14 AM on Wednesday night, and had to be diverted to Kathmandu from Pakistani.

Amid recurring problems occurring during flights and maintenance of the aircraft not being carried out on time, none of the suggestions received for improvement of the NCA have been implemented so far. The number of flights and destinations of the Nepal Airlines, which is operating both domestic and international flights, has decreased.

The committee formed under the chairmanship of former governor Chhetri submitted a report with suggestions to the Minister for Culture, Tourism and Civil Aviation, Sudan Kirati, on Sunday.

According to the report, the NAC, which flew to 39 domestic destinations in the year 2050, currently flies to a total of 19 destinations. International destinations have also decreased. The corporation, which expanded its service to 13 international destinations in 2050, now flies only to 9 destinations. The NAC, which had 19 aircraft in the year 2050, currently has one twin-otter for domestic flights and four large aircraft operating internationally. The rest of the aircraft have been grounded.

During this period, the NAC’s competitiveness in the market has declined due to the entry of private airline companies and the addition of foreign airlines in international flights.

Stakeholders say that the NAC has not been able to make progress due to non-implementation of the suggestions given to improve the state-owned airline company, which is losing market share in internal and external destinations.

Committees, sub-committees and task forces formed several times have given various suggestions to transform the NAC into a profitable, reliable, and safe airline company. The practice of forming one after another committee or task force without implementing the suggestions shows that the ministry is not serious about the managerial and structural reforms of the NAC. Rather, there is a suspicion that such working groups, committees or sub-committees are formed only to provide employment to their people.

On August 7, 2019, the then Minister for Culture, Tourism and Civil Aviation Yogesh Bhattarai had formed a similar committee. The coordinator and former secretary of the committee, Sushil Ghimire, says that there is no point forming new committees if the government is not interested in implementing the suggestions given by such committees.

"The government’s failure to implement the suggestions so far is the lack of commitment to reform the NAC," Ghimire told New Business Age.

Former Secretary Shankar Prasad Adhikari says that there is a trend of making reports and not taking any decision once the repot is prepared. "This trend should be stopped and a decision should be taken at the political level," he said.

The chairman of the latest committee, former governor Chettri, expressed confidence that the government will implement the suggestions made by the committee. "If the NAC is to be bailed out from the current situation, there is no alternative than to implementing the suggestion," he said.

When New Business Age inquired about the implementation status of the latest report with Bharatmani Subedi, secretary at the ministry, he refused to comment saying, "The report is on the website of the ministry, we will talk about the implementation later." The ministry had published the report on its official website on Wednesday.

The report has suggested that the corporation should be converted into a company. Since the report prepared by former Chief Secretary Damodar Gautam on January 2, 2002, it has been suggested to convert the NAC into a company. The latest report also suggested that it should be privatized and converted into a public company, and strategic partners should be invited.

Widebody aircraft operating in losses

The report states that even after six years of operating the widebody-A330 aircraft purchased by the NAC, it has not been able to earn profit. The two widebody aircraft purchased by the NAC started flying from the financial year (2074/75). As the expenses are more than the income of those aircraft with 274 seat capacity, the NAC is consistently losing money while operating those two aircraft.

According to the report, as of last April, NAC earned Rs 7.70 billion from these two aircraft while the expenditure stood at Rs 10.98 billion. Due to this, the corporation suffered a loss of Rs 3.28 billion.