30 Jan-5 Feb 2015 #743

Saving Nepal Airlines

The country’s national carrier is now poised for growth with fleet and route expansion drives.

MARTIN FESTER / HAMBURG FINKENBERGER NEWS
NEW JET: The Airbus 320-233SL of Nepal Airlines (9N-AKW Sagarmatha) with sharklets, the first of two that will augment the fleet this year. The plane will arrive in Kathmandu on 8 Feburary and will start flying the daily New Delhi route.
Twenty-five years of decline has left Nepal Airlines a shadow of its former self, but the country’s national carrier is now poised for growth with fleet and route expansion drives. The ailing airline, however, needs to streamline its management before adding new planes, aviation sources say.

The trajectory of an airline that used to be considered one of the best in South Asia correlates closely with the country’s recent history. The slide began soon after the restoration of democracy in 1990 as politicians interfered with management for kickbacks and patronage.

But it was after 2008, after the ‘Royal’ was dropped from its name when Nepal became a republic, that things went from bad to worse. An airline that once proudly flew the Nepali flag to destinations from Gatwick to Kansai was serving only a handful of destinations.

In 1990 Nepal Airlines had four medium-haul jets flying to 12 international destinations and seven turboprops servicing 20 domestic airfields. Today there are only two 30-year-old Boeing 757s and two airworthy Twin Otters left. The airline doesn’t fly to any point in India anymore, and connects only five airports within the country.

The airline is now preparing to add the first of its two new generation Airbus 320s next month and expand its domestic fleet with six Chinese aircrafts. “But the airline’s management style is out of sync with what is needed to run a modern airline company,” said an aviation consultant who has advised Nepal Airlines in the past. “How can you run an airline like you manage the Food Corporation?”

Airline insiders say politicians, bureaucrats and senior airline management seem to be abnormally eager to sell off the airline’s two Boeing 757s. They fear it will be a repeat of the shady deal by the then Nepali Congress government to dispose of two 727s at below market prices in 1991 amidst widespread allegations of kickbacks.

The airline is also facing a crippling shortage of pilots. At present it has only 25 pilots for its 757s, and five of them are retiring. Six pilots have gone for simulator training for Airbus 320s in Toulouse, and six more will be leaving next month. When they return, rules won’t allow them to fly 757s.

Three of the pilots returned this week after finding the conversion to A320s “too difficult”, airline sources confirmed. The A320 cockpit is much more computerised and its control systems are radically different from the 757s, but there are reports the pilots were sent to France without adequate preparation.

“There will be no one left to fly international routes by next month,” one senior 757 captain warned, on condition of anonymity.

The first Airbus 320 is expected to resume the airline’s Kathmandu-Delhi route which at the moment is operated by five Indian and one Bhutanese airline.

One reason for the shortage is the exodus of 757 pilots in the last decade. A senior captain at Nepal Airlines earns only $1,500 a month, whereas a pilot with as many flying hours in an international airline has an average monthly salary of $16,000.

The airline management and officials are using the lack of pilots as an excuse to rush the sale of the 757s, even though many ex-Nepal Airlines pilots would gladly return to Nepal if offered $6,000 a month. Twin Otter captains can also be sent to China immediately for conversion training so the 757s can keep flying.

The 757s are of the ‘combi’ variety with a forward cargo hatch and have a resale value of at least $18 million each, airline sources say. They are fully depreciated and the company could still use them for budget routes or cargo.

The airline has been hamstrung with a deal pushed by politicians for six Chinese aircraft for domestic operations. The first MA-60 turboprop has barely flown 40 hours in the past six months on trunk routes, and has become such a drain on the airline’s coffers that this week management wrote to the government saying it didn’t want the remaining four planes.

But by far the biggest problem is that Nepal Airlines is run like a third-rate government corporation, experts say, and doesn’t have the management expertise and transparent decision-making needed to operate an international airline.

TAKEOFF CHECKLIST

Immediate four steps Nepal Airlines needs to take to become viable:

Immediate four steps Nepal Airlines needs to take to become viable:

1. Implement a Public-Private Partnership and delink ownership from government

2. Bring in an international management consultant

3. Move headquarters, use present premises for revenue

4. Urgently resolve shortage of pilots

Read also:

New planes, new hope, Vijay Lama

Cashless cow, Binod Bhattarai

Sliver lining in the Nepal sky, Hardik Gurung

Crew loyalty to Royal Nepal tested, Kala Pradhan

Royal Nepal and Corruption, Artha Beed

Royal Nepal Airlines battles battered image, Pragya Shrestha

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