Kathmandu, June 27 :

After the government adopted a liberal aviation policy and opened the skies to private airliners in 1992, the state-owned Royal Nepal Airlines Corporation, now Nepal Airlines Corporation (NAC), received the taste of competition for the first time since its inception in 1958.

The nascent private aviation industry, as was expected, took a little time to take off. In the early 2000, when the Maoists movement neared its peak, the uncertainty that dogged surface transportation due to repeated and prolonged bandhs, came as a godsend for domestic airlines. The resultant boom in the number of air passengers broke the traditional belief that Nepali aviation sector is totally dependent on tourism. Although, there is little doubt that tourism is the backbone of aviation industry.

Being a small country with a small population, the scale of numbers obviates the dependence of aviation sector on the tourism industry. “In recent times, slack in tourism industry has hit the aviation sector badly,” industry players complain.

Cosmic Air, in the newfound garb of a budget airline, has triggered a price war in the Nepali aviation industry, making air travel affordable to the general public. But, industry experts doubt the long-term sustainability of such an adventurous plan or the very existence of such a company.

Globally, low-cost carriers, also often called as no-frills airlines, have been a resounding success. But since, any domestic aviation company in Nepal can hardly be described as

‘an airlines with frills’, the scope for drastic cost-cutting can truly be internecine and self-destructive.

High operational cost and rising fuel prices are something that Nepali airlines can do nothing about and as prices are brought down, the ability to absorb any shock from rising fuel prices becomes, paltry.

Due to volatile and limited market, the mortality rate in Nepali aviation industry has already been high. The once market leader in the domestic industry like Necon Air had to bite the dust.

“Every year, one airlines goes bankrupt,” Rabindra Silwal, general manager of the Gorkha Air, said, adding that there is a problem of long-term sustainability due to myopic financial policies and constant fire fighting.

With rising oil prices, wafer-thin margins and intense competition, survival itself is a challenge. To sustain in this cutthroat environment, most private airlines are accused of concentrating on profitable routes only. However, it is not the whole truth.

Air service plays a very important role in transportation, especially in hilly mid-western region. Private airlines also fly to some of these remote areas, where only NAC used

to fly earlier. Many remote districts, which are not connected through road links need air transportation to ferry essential goods like medicines and food grains.

Aviation experts suggested that the government should form a fund from the money they earn from trunk routes and give subsidy to remote areas.

One cannot claim that the size of Nepal’s aviation market is growing exponentially. But the market size has not been a constraint.

According to a report, three million passenger fly everyday in the US. But in comparison to India, which has a much larger population than the US, only 12 million people travel by air, every year.

Despite the growth in the industry, many are skeptical of the long-term survival of airlines as there is no consistency in passenger numbers.

“There is an increment in passenger numbers on certain sectors but not all the sectors are doing well,” said Silwal of the Gorkha Air, the oldest operating airlines in the domestic sector that has started its operations in 1996.

Out of the 38 Airlines that received the Air Operator Certification (AOC), only 17 are operational now. Volatile fuel price and poor infrastructure are key reasons that the sector could not grow as desired.

“Fuel costs occupy 20 per cent of the total operational cost. This effects pricing,” said Birendra Bahadur Basnet, managing director of Buddha Air, which claims to occupy

the biggest market share of around 60 per cent of the total domestic sector.

“The global fuel market is volatile and so is the Nepali market,” he said. “When the fuel price is hiked, airlines will have no choice but to hike fares,” Basnet added.

The other daunting problem is the poor condition of airports. Most airports outside Kathmandu, have no fire fighting measures. Neither do they have passenger waiting hall, baggage clearing facilities, X-ray machines, drinking water, proper toilets, emergency first aid kits or departure/arrival facilities.

Apart from a continuous harassment for passengers, the lack of essential infrastructures like fire fighting mechanisms or X-ray machines may prove a great threat to security.

Compared to other international airports, the standard of facilities and security at the Tribhuvan International Airport (TIA) itself, at best, can be described as pedestrian.

Even the capacity of Tribhuvan International Airports (TIA) is under scanner. The question that is often raised is, ‘can TIA handle the increasing number of aircrafts’ flow that the domestic and the international airlines are adding?’ The need of another international airport, of international standard, has also been felt for some time now, which will help manage the flow of international tourists more effectively.

For decades, NAC has been synonymous with the aviation industry in Nepal. Once described as one of the world’s finest airlines, NAC has suffered from a loss of image and money in recent years. NAC needs to add more aircraft, which means more money.

Aviation is a very capital-intensive business. To generate more funds, government can look to Non-Residential Nepalis (NRNs) to invest in infrastructure development in the aviation sector.

Apart from that Hotel Association of Nepal (HAN), TAAN, and Nepal Tourism Board (NTB) can also work together to rescue the national flag carrier and the aviation sector as a whole, as they all enjoy what it brings in.

With select international routes having been opened to domestic Nepali airlines, there has been a new glimmer of hope. The rush of migrant labourers in the post-1990 also added shine to this business.

New Nepali airlines like Air Nepal tried to cash in on these routes but without much success.

Another domestic player, Cosmic Air has been making it by the skin of its teeth by flying to neighbouring countries like India and Bangladesh, on and off. It has been flying to the Indian capital New Delhi, Kolkata and Varanasi in India and Dhaka in Bangladesh.

A recent development has indicated that the Air Services Agreement (ASA) with India will be reviewed and the number of destinations where Nepali airlines can fly will be increased.

Nepali airlines could so far fly only to only Mumbai, New Delhi, Kolkata, Chennai, Bangalore and Varanasi. But recently India has agreed to let Nepali airlines fly to 18 more Indian cities, which will definitely boost Nepali aviation industry in the days ahead.

Balkrishna Shrestha, general manager of Cosmic Air is hopeful that the recent development might be helpful to increase new destination in India. “Earlier, due to seat limit and destination limit we could not fly to many Indian cities. Now we are planning some more destinations in India.”

With the sudden increase in the number of airlines, not only pilots but also the cabin crew and hordes of other jobs have increased. The aviation industry has played a major role in the overall economic growth of the country and the government should not ignore the possibility of helping the industry in its growth and improvement efforts.