Nepal Airlines Corporation (NAC),that has long struggled to achieve profitability, is changing its model of operation, specifically for the regional connections.
The Nepal government-owned airline is preparing to acquire aircraft in partnership with provincial governments to operate provincial-level flights.
The corporation has faced criticism over operational inefficiencies and rising losses, despite operating six aircraft, including two wide-body, two narrow-body, and two twin-otters.
However, NAC’s losses, though still significant, have decreased over the past two fiscal years. In FY 2021/22, the airline recorded a loss of Rs 1.71 billion. By FY 2022/23, it had reduced its deficit to Rs 665 million.
To ease this financial burden, NAC initiated a debt swap process and has received applications from two international lenders. Plan of acquiring aircraft under a sharing model are among the other measures, the corporation aims to pursue.
Under the plan, each province would receive one STOL (Short Take-Off and Landing) aircraft, purchased through NAC management with financial investment from the respective provincial government.
According to the corporation, the initiative follows special directives from Culture, Tourism, and Civil Aviation Minister Badri Prasad Pandey. Discussions with all provinces are underway, with funding expected to come from both provincial and local governments, while ownership and operations will remain with NAC.
Each aircraft is estimated to cost up to USD 7.4 million. The proposal also includes painting provincial symbols or designs on the planes to reflect regional identity.
NAC spokesperson Subas Dangi said discussions have already been held with Gandaki and Koshi provinces, with a positive response so far. Talks with the remaining five provinces are scheduled to follow.
Dangi added that small Twin Otter aircraft could be used under this model, allowing provincial governments to determine destinations, flight schedules, and fares.
Despite its long history, NAC continues to struggle with market share and financial challenges. The Corporation’s debt has reportedly reached around Rs 50 billion, primarily due to loans taken from the Employees Provident Fund and Citizens Investment Fund to finance its wide-body aircraft purchases.
NAC operates wide-body Airbus A330-200 aircraft on international routes. NAC currently flies internationally to New Delhi, Mumbai, and Bangalore in India, as well as to Hong Kong, Malaysia, Thailand, Narita (Japan), Doha (Qatar), Dubai (UAE), and Riyadh (Saudi Arabia).
These routes are serviced by two wide-body A330 and two narrow-body A320 aircraft. Domestically, NAC serves remote areas using two Twin Otter planes, though its presence in the domestic market has declined due to a limited fleet.
Worth noting here, Five Chinese aircraft owned by Nepal Airlines Corporation have been parked at Tribhuvan Airport for a long time. The models include two MA-60 and three Y-12 aircraft, those have been parked at Tribhuvan Airport since 2020.
Nepal’s airlines don’t meet international safety standards and are therefore barred from European skies. The European Council’s long-standing concern has been over the CAAN’s failure to “enhance the safety of flyers”. Nepal’s civil aviation body still plays the dual roles of regulator and service provider.
The UN’s International Civil Aviation Organisation and other aviation watchdogs have called for a complete overhaul of CAAN, recommending that it be split into two entities.
