Nepali Times
Economic Sense
Royal Nuisance Always Cancels


The last month has been a nightmare for anyone travelling with Royal Nepal Airlines Corporation (RNAC). A schedule marred by cancellations is more than just a pesky nuisance, but one has to agree with this snide remark overheard in an international airport: "What can you expect of an airline with one-and-a-half aircraft?" So while Nepal Tourism Board and private tourism entrepreneurs do the hard sell of Destination Nepal through promos and sales blitzes in India and abroad, the national carrier is spending more time grounded than in the air.

The RNAC has long been dogged by controversy and corruption ('Royal Nepal and Corruption', #22) and the Beed sees distinct parallels between the parastatal entity and the state of the nation. There are whispers that the cancellations were 'created' to support the case for a new aircraft, but the problem does not lie in merely having new planes-though it would be nice for longhaul RNAC flights to have personal entertainment centres ? la better international fleets.

Wonder what went wrong with governance and flourishing institutions post-democracy? Look no further than RNAC. Once a profitable airline that made enough money to pay the foreign exchange lease rentals on their Boeings, today its fleet is less than half of what it boasted 15 years ago. The politicians milked the cash cow, bureaucrats and employees had their share too and of course monetary subsidies in the form of jobs-for-life bloated expenditures. Financial discipline became a foreign notion with audits that never took place in time. And the game of musical CEO chairs at Royal Nepal was rivalled only by that of the prime ministerial kursi race.
Perhaps setting RNAC in order will send the right signals to the people ruining the country, irrespective of who is in power or what system should be ruling. They both need a good shake up, the former not the least because 1,000 employees per jet is ridiculous!

A strategic partner that knows how to run an airline must be roped in. Political appointees who are hardwired to hand cuts to their masters will not do. While they're at it, a core group should look at revenue potentials that already exist. More than 70,000 seats are available in terms of agreements that we have with various countries-a plus for any investor. The airline should opt out of the domestic routes and leave that to private operators. However, regulations must be put in place for private airlines to fly low-margin, non-commercial routes. It's not strange that several businessmen who boast about the imminent arrival of their fleet of Boeings and Airbuses never seem to lift their plans out of the cocktail circuit. What they are not able to admit is that perhaps Nepal hasn't produced the potential to start a private international airline. The financial commitment is too much given the risks.

The solution is simple enough. Let in a strategic partner. Give RNAC enough finances and smart people at the helm. It will succeed. So what if bigger international players are not interested? We will be content with formidable regional players. We have always tried to find a perfect solution, let us start with a good one.

(11 JAN 2013 - 17 JAN 2013)