BMD

The global aviation sector has been struggling hard for survival after incurring an unprecedented loss with the eruption of COVID-19. This sector is an essential part of tourism. Nepali airlines, including the national flag carrier, too, are not an exception. What is more worrisome is that the Nepal Airlines Corporation (NAC) is now on the verge of bankruptcy.
The airline has failed to pay interest of loans and instalments to the Employees' Provident Fund and Citizen Investment Trust. It had taken billions of rupees as loans from these organisations to purchase two Airbus 330s and two 320s on government's guarantee. The airline had aimed at spreading its wings to more destinations.
But the NAC's financial condition could not improve even after having added four planes to its international fleet as the management did not have a good business plan. It initiated the aircraft purchasing process without having a business plan. The lingering global public health crisis has caused a further damage to the corporation's financial health. Many countries across the world have now been imposing travel restrictions owing to the emergence of new variants of COVID-19.
In addition, the airline has also been bearing the brunt of a ban imposed by the European Commission (EC) on Nepali carriers. With the prohibition in place since December 2013, the NAC has been unable to resume its services to Europe.
The airline's poor performance and accumulating losses may have prompted the government to seek ways for improvement. In line with the government's budget for the fiscal year 2021/22, the NAC management has initiated the process of transforming the state-owned corporation into a public limited company. But the NAC management and employees have now been at loggerheads over the issue. The trade unions close to different political parties have strongly opposed the idea of changing the organisation's model, accusing the management of conspiring to privatise the corporation, leaving the employees and their dependents in the lurch.
However, the management views that the corporation is not in a position to operate as it is so it is necessary to transform its model for its survival and growth. It has been reeling from utter mismanagement and corruption. Established in 1958, Nepal Airlines was regarded as one of few leading carriers in the South Asia in 1990. But politicians, irrespective of their ideologies, have been found misusing the corporation as a cash cow. Numerous infamous corruption scandals such as the Dhamija scam, Chase Air scam and Lauda Air scam have not only caused a huge loss to the airline but also tainted its image as a credible carrier in the international market.
With several planes in its domestic as well as international fleets, Nepal Airlines had better domestic and international network and market share. In the 1980s, the airline would fly to as many as 38 domestic and almost one dozen international destinations. It was the only carrier to provide services to people living in remote hilly and mountain regions. Thus, it contributed to economic development of the outlying regions and promoting national unity.
Now the government must explore ways to restore its glorious past. The airline should be free from unwanted political interferences and corruption so as to develop it into a robust commercial carrier that can alone compete with others on domestic and international routes.