Revamping The NAC

For many countries, a national flag carrier is the source of their pride. This explains why it receives preferential treatment from the nation it represents. The Nepal Airlines Corporation (NAC), the nation's flag carrier, has been accorded the same privileges by successive governments. However, over the past decades, the airline has failed to live up to its expectations.  Mired in one corruption scam after another, it has been incurring losses amounting to billions of rupees. 

Things have become so alarming that Prime Minister Sushila Karki had to step in. On Sunday, she instructed the board and management officials to promptly remove the contract employees hired based on political connections. The Prime Minister also issued a strong directive to end financial irregularities there and highlighted the urgent need for the regular maintenance of its aircraft and maintaining good governance. Besides, Prime Minister Karki has emphasised the need to implement the recommendations from previous reports on corporate reforms with a clear plan of action. 

One of the oldest airlines in South Asia, NAC has long been hamstrung by mismanagement and corruption. Frequent change in leadership only exacerbated the matter. Unreliable service has meant that it has failed to win over passengers. All these factors have pushed the airline into serious financial trouble. It has been unsuccessful in making repayment of loans taken to purchase the A320 and A330 planes. The airline’s market share has been in free fall as its fleet has shrunk.  

But this was not always the case. In the 1980s, its heyday, it flew to 38 domestic and 10 international destinations. At that time, the company boasted a fleet of 19 planes, including a state-of-the-art Boeing 757.  Starting in 1958, the same year Thai Airways (TA) was born, it was once a source of national pride. While the TA now operates a fleet of 85 planes, the NAC operates only six.  The unenviable spot the latter finds itself in offers cautionary tales of managerial flaws and corruption, while the former soars higher and farther, generating record-shattering profits. 

Although the airline’s management has come up with its fleet expansion plans, they appear to have been derailed due to a lack of political will.  Making things worse, it has witnessed numerous scams over the past 30 years, with one being a wide-body scam. It has also suffered staggering losses due to fraudulent business schemes as a result of unsolicited political interventions. All these have effectively tarnished its reputation as a credible carrier.

In the past, some efforts were made to strengthen the national flag carrier. Several task forces were formed to make suggestions for the government to step up desired measures to develop NAC into an efficient commercial carrier. There have been recommendations that the government come up with a concrete plan to look for an international strategic partner for the NAC to improve its financial health. However, it has failed to free itself from the shackles of nepotism and favouritism, which continued to push it downhill. 

The government must take drastic measures to stem the company's rapidly ballooning losses. For this, it should work aggressively in line with the recommendations to revive its former glory. The government cannot continue to afford to bail out an organisation with the taxpayers' money. The NAC must be able to make its own money.