After procuring two narrow-body Airbus jets, Nepal Airlines Corporation (NAC) has begun the process of acquiring two wide-body aircraft from the European plane maker.
An NAC technical team is holding a study to identify the appropriate and feasible aircraft model. The team is preparing a detailed planning document that typically includes analyses of route and business.
“The wide-body jet procurement process has formally begun. Our technical team is preparing plans and tender documents,” said NAC Managing Director Sugat Ratna Kansakar. “Global bids will be floated by the next three-four months after the documents are prepared.”
Based on the list price, two jets could cost $170-180 million. “We are considering models like the Airbus A321, A350 and A330,” said Kansakar.
The national flag carrier purchased two Airbus A320-200 aircraft this year by borrowing Rs10 billion from the Employees Provident
Fund (EPF). As the corporation has put its entire property up as collateral with the EPF, its fund raising doors are almost closed. These aircraft were purchased for the first time in 27 years.
However, NAC officials said they have two options to finance the jets. The first option is lease purchase, the same financing modal that NAC adopted while purchasing its two Boeing 757s in 1987 and 1988.
The $110 million order for these two planes was Nepal’s largest trade deal at the time. London, Dubai, Dhaka, Karachi, and Bombay were added to the route network in 1989 after the purchase of the two jets.
A company was established in London to make payments to an American company that had financed the aircraft, and it took 12 years to repay the loans.
Under this modality, NAC can make the payment on a quarterly basis. At the end of the lease-term, the buyer has the option to purchase the jet. However, for this modality, the government has to be a guarantor. The second option, according to the NAC officials, is requesting the government for a loan.
Two weeks ago, NAC had invited a four-member Airbus team to discuss a suitable model for Nepal’s terrain. Kansakar said the company could not make a great difference in the market without wide-body aircraft in its fleet.
NAC’s 10 years business plan (2014-2024) has proposed procuring four wide-body and five narrow-body jets, including the recently purchased A320, to deploy them on long-haul routes like Europe, Australia and the US, including Asia. As per the plan, the carrier will phase out its two 757s by 2019.
Under the NAC’s business turnaround plan, all the suspended routes will be reopened. Nepal has signed the air service agreement with 36 countries, but the lack of aircraft has confined its growth.
Presently, NAC holds a meagre 5.87 percent market share in the international segment. It flew 206,430 passengers last year. It serves five international destinations and plans to expand operations to four more destinations, namely Guangzhou, Dubai, Bangalore and Mumbai by this year. Over the last decade, the number of international destinations has been slashed from 21 to five reflecting spreading malaise within the carrier.
Four foreign pilots hired
Four foreign pilots have joined the Nepal Airlines Corporation (NAC) to fly its two Airbus A320 aircraft. The corporation has been facing a shortage of A320 pilots after some Nepali captains sent to France for Airbus pilot training returned back without completing the programme. NAC MD Sugat Ratna Kansakar said they have forwarded the pilots’ documents to the Department of Labour and Employment for work permit. Currently, a German instructor pilot has been flying the new Airbus. Due to the lack of pilots, NAC has not been able to operate the new aircraft smoothly. The foreign pilots will be hired for a period of six months to one year, depending on the need.