World airlines today have started facing the business reality of competitive environment. Competition among domestic as well as foreign airlines is getting more intense day by day. It appears that market forces have started working and it is attracting more and more new airlines to enter into aviation industry and at the same time many early starters are going out of business. The theory of the survival of the fittest will hold good and those who will not keep themselves competitive and capable possibly will not stay in the business for a long time to come.

There are strong indications that all is not well with the state-owned carrier, Nepal Airlines Corporation (NAC). Its operational structure built over the years is on the verge of collapse. The number of aircraft is decreasing. Staff morale is at the lowest ebb. Customer demand has become nobody’s concern. There is a sense of gloom everywhere in the organization. People are expecting the unexpected to happen any day as the airlines is suffering from acute shortage of aircraft since long time ago. It is beyond anybody’s comprehension as to how and why it has reached to the present situation. It would be a matter of great interest if it is analyzed what has gone wrong with the national carrier and a probe undertaken to find out the causes of its ailments.

As is known, NAC for the last two and a half decades has not added any single aircraft to its fleet whereas during this period the airlines has lost several aircraft causing extreme shortage of air seats. At present, NAC is holding two Boeing B-757 and four DHC-6 Twin Otters. But due all these aircraft being old, its scheduled flights are frequently affected and hardly two or three Twin Otters are available for its domestic operation. As such, domestic flights, to some extent, have become unreliable which have detracted its passengers to opt for other carriers.

The existing external route network of NAC requires one more aircraft having 200 plus seats for conducting smooth and reliable service to its customers. Unless required number of fleet are made available for both domestic and international operation, NAC schedule will remain in shambles and it will continue to be treated as less reliable airlines. Therefore, the national carrier is in a dire need of additional aircraft to maintain its scheduled flights as well as to replace its aging aircraft.

Aircraft procurement, however, has always been a sensitive issue for the state-run airlines of developing countries like Nepal. Acquisition of aircraft requires massive investment that necessitates the national government to get involved in the procurement process. But government participation in the process of buying the aircraft is not viewed very kindly by some members of opposition parties and they join the fray. Sometimes they blow the issue out of proportion and the media picks up threads and they also sensationalize it which normally becomes a hot topic of discussion among the elite gentry as well as common masses of the country and consequently the airlines suffers on business front.

Publicly, aircraft acquisition has never been treated so unkindly in Nepal. Procurement or acquisition of aircraft has always been welcomed and given good acceptability by hoteliers, tourism industry and general people. But the changing atmosphere has given birth to a number of pressure groups within and outside the corporation who occasionally put pressure on top management minimizing their authority. Since these pressure groups are highly politicized having links with various political parties, their objective and management’s objective could differ and cause immense damage to airlines productivity.

Acquisition of aircraft is a complex affair and it requires handling with utmost care and great maturity. In mid-1980s, Indian Airlines purchased around twenty A-320 aircraft from European Airbus Company during the tenure of Rajiv Gandhi government in order to replace ageing Indian Airlines B-737 aircraft but it was not taken kindly by the opposition parties in the parliament. When the next government took over the power A-320 became the first victim and the entire aircraft was grounded for over a period of one year on doubtful technical reasons causing huge financial losses to the Indian Airlines.

Similarly, Biman Bangaladesh Airlines bought a few British made ATP aircraft for its domestic operations during the presidency of General Irshad. On his departure from the scene all the aircraft were put on ground for technical reason for years together causing severe financial losses to the airlines. All this was done more for political reason rather than for technical or safety concerns. Thus, most of the state-owned airlines management shy away from buying of new aircraft for fear of scrutiny and possible harassment by various investigating agencies.

NAC’s present woes can also be considered as the by-products of excessive government control. Government considers it its inherent right to exercise control on entire activities of the airlines as its sole owner. Almost 60 per cent of present financial liabilities of NAC are the creation of earlier government interventions and interference. For example, the so-called Dhamija scm and a series of leasing of aircraft including Chase and Lauda Air combined together may have cost NAC more than one billion rupees. But for all of these perhaps NAC would have been in a better shape.

The governmental interference ranges from recruitment, posting, promotion, tours and training to disciplinary action for no valid reason. All these create bad precedence for the top management of the airlines who fall in the trap of vicious lobbies and the story keeps on repeating every time a new minister joins the ministry. The interference does not only stop in staff matters but it goes in almost all areas of NAC including appointment and termination of overseas agents, their incentives and privileges, free-ticket distribution to their kith and kin and in many regular and routine procurement matters.

Thus, if NAC position has to be ensured for better tomorrow it has to be managed professionally without any interference and intervention from the outsiders in any area of its activities. NAC decision to go with new aircraft should be implemented as it is largely influenced by competitive and compelling market conditions. The government, however, may issue directives in the area where it considers the airlines is crossing the limits of national interest. Given the required autonomy, perhaps NAC may still be brought back to the limelight and its turnaround could be achieved, of course, with a lot of hard work and sacrifices of all those who are associated with the national flag carrier.