Nepal Airlines’ Brand New White Elephants

Nepal’s national carrier, Nepal Airlines, once brought the majority of visitors to the country, but now has less than five percent of the market. Competition from an increasing number of foreign carriers was part of the reason, but the core problems were graft, patronage, and incompetent management.

I have believed for several years that closing the airline was the best option. See Nepal Needs Neither NOC nor NAC, Closure of Nepal Airlines Will Save Money and Cut Corruption, and Time to Close Nepal Airlines. Instead the government chose last year to buy Chinese MA60 and Y12E turboprop planes and to place an order for two Airbus A320s.

So far the decision looks like a fiasco. China gave Nepal Airlines one MA60 and one Y12E to sweeten the purchase deal, but those aircraft have been operating only intermittently. Airline officials say that neither plane is earning back its operating cost yet. Parts, maintenance, and training problems can ultimately be addressed, but neither plane can carry its full rated passenger load under Nepal’s conditions, something that apparently came as a surprise to Nepal Airlines officials.

Worse though, the Chinese planes’ insurance costs more than they can earn: Airline officials say that the MA60 nets about $1,500 per day operation but that they pay nearly $2,500 per day to insure it.

nepal airlines takeoff
Nepal Airlines plane takes off, with a view of the mountains.

The first new Airbus arrived in Kathmandu on February 8 in the wake of news that half of the pilots sent to France to train on the aircraft had quit the class and returned home. The Nepali pilots designated for A320 training by airlines currently fly the outfit’s only two large planes, Boeing 727s that are almost 30 years old. They quit the training because they found it too hard to learn to fly the thoroughly modern A320.

As a result Nepal Airlines will have only two trained pilots available Wednesday when the new Airbus makes its inaugural flight from Kathmandu to Delhi.

Full staffing for an A320 is fourteen flight officers – pilots, co-pilots, and navigators – with three officers on the flight deck at all times. An instructor pilot from Airbus will join the two qualified Nepali pilots for the initial flights, but the airline will almost surely have to ground the plane after that until it can get more pilots trained. The alternative is to hire foreign pilots at approximately four times the cost of Nepali pilots, which will eat up the Airbus’s projected profit.

Poor planning and incompetent management have marked the introduction of both the Chinese and European planes. Apparently no one at the airlines did the cost / income analysis for the smaller craft, and training for pilots designated to fly the Airbus started far too late. It’s sad but no great surprise that $250 million worth of new aircraft already look like white elephants.

John Child is The NewsBlaze Nepal Correspondent, a journalist in Kathmandu who writes about goings-on in and around Nepal and her neighbors.