Kathmandu, 16 Oct: Nepal Airlines Corporation (NAC), which once established Nepal’s presence in the international aviation sector by operating flights to destinations such as London, Paris and Frankfurt, is increasingly being pushed into crisis due to a shortage of skilled manpower, a lack of aircraft and a growing debt burden. Only the effective implementation of a strong, clear and robust business strategy can restore the national flag carrier to its former glory.
The crisis has deepened over time due to weaknesses in financial discipline, institutional leadership and business strategy. Aviation experts believe the corporation’s current situation did not emerge overnight but resulted from political interference following changes in government, management failures, aircraft procurement scandals, bureaucratic hurdles and weak competitiveness, which gradually eroded its institutional capacity.
Former Director General of the Civil Aviation Authority of Nepal (CAAN), Triratna Manandhar, said foreign airlines established after Nepal Airlines, including Thai Airways, Cathay Pacific and Singapore Airlines, had become prestigious carriers by responding to market demand, expanding their destinations and improving service quality. Meanwhile, Nepal Airlines remains entangled in operational costs and management challenges.
“Nepal Airlines has now reached a state similar to a critically ill patient in intensive care,” he said. “This situation was not caused by the current government but by previous governments that failed to give the corporation the necessary priority. The current government and leadership understand the nature of the problem and how it should be treated. Immediate action is needed to manage resources by seeking investors or strategic partners. The government must explore options such as direct investment, attracting new investors, public-private partnerships or a merger to prevent the corporation from collapsing and restore it to its former condition.”
Manandhar said flight operations at the corporation could still be disrupted by minor technical problems. He added that retaining skilled employees, developing new human resources and maintaining good governance had never received adequate priority.
Strategic Partnership Needed
Former Nepal Rastra Bank Governor Dipendra Bahadur Chhetri recommended adding aircraft, improving management, strengthening internal audits, ensuring institutional good governance, developing a realistic business plan and establishing strategic partnerships with international airlines to reform the corporation’s structure and management.
He said the committee formed under his coordination to study and recommend reforms to the corporation’s structure and management was the 10th such committee. However, recommendations made by that committee and two or three additional committees established before and after it have remained unimplemented in the offices of Nepal Airlines and the concerned ministry.
“Recommendations such as adding aircraft according to market demand, recovering outstanding dues and implementing a 10-year aircraft expansion plan have not been implemented. As a result, aircraft shortages, mounting debt and weak operational capacity continue to be the corporation’s major problems,” he said.
Chhetri said the corporation was heading towards collapse because it had failed to implement recommendations made by various study committees formed over the years to address structural problems. He stressed that the government needed to make decisions to professionalise management and purchase smaller aircraft to expand domestic routes.
Efforts Needed to Remove Nepal Airlines from the EU Air Safety List
Chhetri said the government must immediately take initiatives to help Nepal Airlines get removed from the European Union’s air safety list. He also emphasised the need to arrange aircraft capable of operating flights to European destinations as well as smaller aircraft to serve accessible and remote areas within Nepal.
Former Nepal Airlines Director Achyut Raj Pahadi said incompetence, wide-body and Chinese aircraft procurement, commissions and corruption had pushed the institution towards a critical state.
“Currently, the corporation is burdened with debt of around Rs 55 billion,” he said. “While foreign airlines and private domestic carriers are increasing their revenues, Nepal Airlines continues to suffer from deep-rooted problems that prevent it from becoming efficient, customer-friendly and commercially self-sustaining.”
Pahadi said Nepal’s aviation market was worth approximately Rs 135 billion, but Nepal Airlines accounted for only around 15 to 16 percent of the market, with foreign airlines capturing the remaining share. Despite this, he said, the national flag carrier had failed to receive the priority it deserved from the state.
He added that although the government and the corporation could make decisions involving billions of rupees for aircraft purchases and operations, they had failed to develop long-term plans for managing the human resources required to operate flights.
He also pointed to the failure to appoint experts with professional qualifications, experience and clearly demonstrated performance capabilities to leadership positions. Frequent policy changes accompanying leadership transitions, he said, had further undermined the prospects for reform.
Tangible Improvements Are Essential
Acting General Manager of Nepal Airlines Janak Raj Kalakheti said structural reforms, a review of interest rates and the expansion and modernisation of flight services were essential to achieving improvements that the public could actually experience and making the corporation financially sustainable.
“To improve the corporation’s current situation and strengthen its financial position, it is necessary to review the interest rates on loans taken from the Citizen Investment Trust and the Employees Provident Fund, introduce structural reforms and emphasise professional competence,” he said.
He added that the corporation was preparing to move forward with a concrete action plan to implement recommendations from previous study committees at the policy level, manage technical personnel and strengthen maintenance systems to ensure that aircraft remained regularly airworthy.
Meanwhile, Ministry spokesperson Jayanarayan Acharya said the ministry was actively paying attention to transforming the historically significant institution, recognising that it needed to be treated as a priority.
He said the ministry remained committed to taking the necessary steps to revitalise Nepal Airlines and restore its standing as the country’s national flag carrier.
