Yeti Airlines is on an ambitious expansion drive, and has become the airline with the largest domestic network in Nepal. But this not because demand for domestic flights is up, says General Manager Vijay Shrestha in this interview with Nepali Times.

Nepali Times: Your expansion must mean business is good.
Vijay Shrestha: In the international sector, Nepal is making some progress by having an open sky policy. In the domestic segment, however, people see the rush for tickets and assume that there has been a growth in passenger traffic. But that is because capacity dropped by half after Necon Air's collapse. Many misinterpret this as growth, it's not. There hasn't been a significant increase in the sector in the past two years.

But haven't security hassles on buses boosted demand for air seats?
Not really. Because of economic non-performance, there is a general slump in travel, both by air and highway. Some passengers find it difficult to get tickets, though their numbers are not very high. There isn't much of a business to cash in on under the current security situation. There isn't too much surplus demand.

So how come you are adding two new SAABs?
We had three Twin Otters serving STOL airfields and covered 70 percent of that market. But we decided to get the two SAAB aircraft to fill the vacuum left by two Necon ATR42s being out of the picture and decided to jump into trunk routes also. Over the last six years we have grown into a company that has provided sufficient services to remote areas-more than any other airline. We'd also like to operate internationally in the near future.

What lead to the shakeout in the domestic airline industry?
It has to do with how the operators look at the entire market. The bottom line for airlines is economics. The profit margin is very slim-about three percent-even when things are going well. Over the last few years, the global airline market has gone down radically. In Nepal, since the GDP is plummeting, it reflects on the airline industry too. The airlines that closed used gas guzzlers like Avros, and as soon as better and newer aircraft were introduced, passengers choose to fly in them.

Given increasing air accidents, are we to deduce air safety is being compromised?
Actually, Nepal's air safety record is very good. The accidents and incidents that took place in the past had to do with the weather. CAAN has never compromised air safety. Every airline knows safety enhances profit. An accident slashes sales growth. Airlines can't afford to have heir planes grounded after an incident. Nepali airlines have small fleets and if one aircraft is lost, capacity goes down significantly. If we compromise on safety, we put our entire business at risk.

Any reason why private operators ignore remote areas?
It isn't so bad, if you consider the traffic growth in the last 10-11 years. After RNAC withdrew from remote areas, private operators have filled the gap. For instance, the traffic from Nepalganj to Jumla has grown by more than 70 percent. Passenger traffic has grown even in remote areas.