Nepal | March 28, 2020

Airlines suffering due to low passenger load

Nepal incurred an overall loss of 42 per cent from aviation earnings and airlines cut down on flight frequencies

Surendra Tandukar

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Kathmandu

Already marred by the massive decline in the number of inbound air passengers due to the April 25 earthquake, international airlines operators are now having a tough time after the implementation of free visa free ticket for outbound Nepali workers. Most airline companies have reduced the frequency of flights following the earthquake and the manpower fiasco. Airlines operators have been hit hard in light of the manpower agencies protesting against the government introduced free visa and ticket rule to seven major labour destination countries.

Although both parties have reached an agreement to implement the new policy there are many points to be followed to materialise the understanding. As a result, the country has incurred an overall loss of 42 per cent from aviation earnings compared to the earnings before the earthquake. The earning includes ground handling charge and fuel charges.

Revenue loss

Experts opine that if the situation does not improve soon, the country will have to face a loss of 55 per cent. The government’s total revenue income from ground handling before April 24 stood at USD 500,000 from 132 flights per week. It was reduced to USD 340,000 from 91 flights per week after April 25. Similarly, it was again slashed to USD 300,000 from 80 flights per week after July 6 (when the government incorporated the free visa free ticket rule for outbound workers). Likewise, the government’s total income from aviation fuel before April 24 stood at USD 2.375 million per week while it was reduced to USD 1.65 million and then to 1.45 million respectively during the aforementioned periods.

Half full or half empty

“Be it inbound or outbound flights, international airlines companies are having a tough time to manage the number of passengers for both the flights,” said representative for Etihad Airways,Nepal, adding that they have been witnessing a significant decline in the number of passengers by around 40 to 50 per cent post earthquake.  Citing that many airlines companies have lowered their flight frequencies to and from Nepal, she said, “As of now, we have managed to operate all our flights.
Currently we are in wait and watch mode, but if the situation does not progress by the year-end, we also will have to rethink the frequency of our flights.”

According to her, lack of proper tourism recovery plans after the earthquake coupled with the conflict between the government and manpower agencies in July are the major reasons behind the slump in passengers for international flights. “The concerned government authorities will have to convince the international market with aggressive promotional programmes as soon as possible for the speedy recovery of the tourism sector,” she said, adding that the government also has to resolve the issues with manpower agencies at the earliest for the smooth operation of airlines in the country.

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Tourism recovery lacking

Many airlines operating service to and from Kathmandu focus on migrant workers’ destinations and have been receiving comparatively lower demand after the earthquake. Outbound Nepali workers are one of the major sources of business for international airline companies flying from Nepal. According to representatives of airlines companies, the airlines need at least 60 to 70 per cent occupancy to cover their operating cost. “Since the concerned authorities have not been able to come up with proper tourism recovery plans even three months after the quake, the country has been losing a huge sum of revenue from the aviation sector alone,” said Bhola Bickram Thapa, GSA of Air Arabia, Malaysian Airlines and Indigo Airlines. “At a time when the airlines were already marred by a massive slash in the number of inbound passengers, the government should have acted wisely to avoid unwanted problems in the outbound flights,” he said, adding that the government should have held the introduction of the new policy on manpower agencies for at least five months later.

Warning that the situation might get worst if the issues are not solved on time, Thapa, who is also the President of President Travels said, “The government has to create a conducive environment to ensure the smooth operation of flights.” According to him, they have managed to maintain the regular flights of Malaysian Airlines and Indigo Airlines, however, of late they have reduced the daily four flights of Air Arabia to one single flight.

Unlike others, President of Airlines Operators Committee, Bharat Kumar Shrestha has a differing view. “The airline operators had to face a tough time immediately after the quake and a couple of weeks following the manpower fiasco,” he said, adding that however, the airlines are slowly resuming full-fledged flight frequencies these days. “Since most foreign countries have started to announce Nepal as a safe tourist destination, the inflow of tourists has gradually progressed,” he said, adding that the off-season following the earthquake was the main reason for the slim inflow of tourists in the country. “As far as the manpower fiasco is concerned, we hope there will not be such issues in days to come as both the parties have already come to a common understanding.”

However, Shrestha, who is also the airport manager of Oman Air, informed that Chinese airlines are the only ones which have massively slashed their flight frequencies after the quake. According to him, the Chinese airlines have reduced their 72 weekly flights to hardly 12 flights per week after the quake till date. He is of the opinion that the government has to take initiatives to promote tourism internationally. “If things go smoothly, the aviation sector will breathe a sigh of relief by the end of August,” he said.

According to data provided by the Board of Airline Representative in Nepal (BARN), the government revenue collection from passengers was reduced by 43 per cent from Rs 80.37 million in March to Rs 46.12 million in May after the quake. Similarly, it was reduced by 67 per cent to Rs 26.28 million in June. The number of total international flights from March 15 to 21 was 249 while it dwindled by 32 per cent to 173 flights from June 9 to 15.Similarly, it declined by 40 per cent to 152 flights from July 9 to 15.

Necessary steps needed

Meanwhile, Chairman of BARN, Saroj Kumar Kasaju, said, “Initially, we had suffered from over 60 per cent decline in flight occupancy, but now it has come down to around 40 per cent.” He opined that the current settlement of outbound manpower issue is a temporary problem while the serious problem lies in the inbound flights. He complained that the Tourism Recovery Committee has not come up with any concrete plans and programmes to revive Nepal’s tourism. He said, “The airlines operators will have to suffer even more if the situation does not improve soon.” He also urged the concerned stakeholders to take necessary steps before it is too late.


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