Just how bad are things at the airline today? Royal Nepal was set up 43 years ago with the objective of providing reliable air services, and running on the income generated in the process. We did that. We are an independent corporation and have to earn our own keep.
So how come things got so bad?
Definitely our public image has taken a knock. Some of this negative impact has resulted from RNAC's own shortcomings. There were lapses in the past, I may also make some mistakes. We're all human. In the four-and-a-half months I've been here, I have reached one conclusion: there needs to be a shift in the way we perceive the corporation.
Knowing how bad things were, why did you agree to join?
I was aware of the RNAC's finances, business, public image when I joined. I also knew my appointment and things I do would be controversial. I came because I wanted the challenge. My immediate goal is to use the corporation's resources fully, generate revenue and curtail non-sustainable expenses to make the airline sustainable.
How?
By gradually curtailing loss-making sectors and diverting flights to more profitable routes. The first step is stopping flights to Bangalore, which has been almost decided. A committee left for Dubai this week to discuss flying there from June.
Why Dubai?
It's a regional hub. I'm concerned with bringing passengers from Europe to Kathmandu. Emirates has connections with almost every major city in the world. Ideal would be an arrangement with Emirates, especially a code-sharing one. They don't fly to Kathmandu, we don't go to Europe anymore. My plan is, carry Emirates passengers coming from Europe to Dubai to Kathmandu and back. Let's see how the negotiations go.
Where does this fit in with the government's privatisation plan?
I don't want to comment on whether there should be privatisation or not. But as an airline person, I don't think this is the time to privatise, there's no reason to do it immediately. The government initially invested Rs 100 million, then another Rs 270 million. Today the RNAC's assets are worth Rs 7-8 billion-the two Boeing 757s are worth Rs 4.5 billion, the seven Twin Otters about Rs 1 billion, the property and real estate at New Road is alone worth Rs 1.5 billion.
Our total liabilities are about Rs 2.5 billion-one billion as overdraft for operational expenses and other payables worth about Rs 1.5 billion. The current liability of Rs 1.5 billion is very serious. We have not been able to get a repaired engine back because of cash shortage. We haven't been able to pay the lease fees to China Southwest. We have not been able to pay dues at the Nepal Oil Corporation, the Civil Aviation Authority, and airport authorities in India, Bangladesh and China. We don't have money to purchase spares, or clear old dues. If only I could get the assets re-valued, pay off the current liabilities and have a face value, RNAC would be able to improve its reliability and public image.
You need cash, which your owner, the government, does not have. How are you going to solve that problem?
First, I will have to approach the owner. Elsewhere, governments have helped national airlines in difficulty. The Indian government has just injected money into Indian Airlines, the Swiss have bailed out Swissair. I am aware the government doesn't have money, so we seek its moral support. The government can at least ask financial institutions under its control to help us, because we still have assets. If I were only able to clear the current liabilities of Rs 1.5 billion, we would have a face value.
Can government force financial institutions to give you credit?
We are not asking for cash from the treasury, but it can request institutions to invest in us. A single bank can't give us more than Rs 200 million-that is against the rules. So there must be a consortium. It could get government-controlled financial institutions to lead such a group. Some of our assets are mortgaged with those institutions and we have not defaulted on interest payments. Their worry may be whether we will repay the principal. With the right marketing and management, we can.
Because all these efforts would give the airline a face value, even if you privatise, you will get a better price than if that is done immediately. That again is a government decision.
What about political interference and corruption?
Being a government organisation we have to follow its directives, financial, administrative or regulatory.
Even on day-to-day running, and on hiring?
In the past four-and-a-half months I haven't received any. To be very honest, there's been no interference from the ministry. There have been no directives relating to day-to-day business. By law we can do everything on our own, except aircraft purchase and leasing.
Kickbacks on past aircraft leases have been national scandals...
All that is manipulated, baseless, imaginary and unethical. When our aircraft was grounded in Bangkok two weeks ago, we were charged with corruption and flying an unsafe aircraft. Remarks like these don't insult me, they insult the national airline, it is a national insult. If the media has questions I am always available, but few have bothered to ask.
What about charges that politicians are stealing money from the RNAC?
How can you do that, we have our own accounting system. How can government take money from here?
The RNAC has perhaps the world's highest staff per aircraft ratio, including deadwood.
To an extent that is true. In the past we had many aircraft, two 757s, two Avros, two 727, 14 Twin Otters and the staff were recruited for that capacity. Even when we leased aircraft we did the handling. All are permanent staff, and we definitely have more than what we need. But they are also among those with world class training and experience. We will need them when we grow. Our business is down and so is the number of aircraft, in that context the 1,800 or so employees appear to be too many. But that will change the moment our situation improves.
And when is that going to be?
Six months from now.
