Nepal Airlines Corporation (NAC) is all set to issue a request for proposal (RFP) to induct a foreign firm as a management partner in a bid to improve its performance and better manage the existing operations.
According to NAC, the RFP will be floated in two-three weeks. The national flag carrier has long been facing criticism for its failure to assure quality and efficiency.
Ram Hari Sharma, spokesperson of NAC, said that the management contract would be valid for two years. The corporation plans to hand over management of key departments like finance, operation, human resource and engineering to the partner.
NAC moved to induct a foreign management partner after two global companies, Airbus and Lufthansa Consulting, showed interest in coming aboard. “As a number of foreign firms have shown interest to be our management partner, we decided to float the RFP so that they are selected through a competitive bidding process in order to ensure the best products and services,” said Sharma.
In March, German-based Lufthansa Consulting and German Aviation Capital had submitted their proposals to the Prime Minister’s Office to provide consultancy and management services to improve the performance of NAC and enhance its operational efficiency.
The two companies had proposed overseeing three major departments, namely commercial, operation and engineering, besides holding the post of chief operating officer to help the struggling flag carrier.
German Aviation Capital had proposed that if NAC were to sign an agreement with Lufthansa Consulting, it would help the airline finance four narrow-body and two wide-body jets.
Lufthansa Consulting is an international aviation consultant for airlines and is an independent subsidiary of the Lufthansa Group. Similarly, German Aviation Capital is an aircraft leasing company based in Frankfurt. In response to their proposal, the Ministry of Culture, Tourism and Civil Aviation had asked the national flag carrier for its opinion. NAC replied that it was not in favour of having a single party for its management takeover plan.
Recently, European aviation giant Airbus expressed its readiness to study the engineering and operation departments of NAC and recommend appropriate measures to improve these key departments.
In July 1970, the then Royal Nepal Airlines Corporation (RNAC) had invited experts from Air France under a programme to improve management, and they handled most of the managerial positions until 1973. In 1972, RNAC acquired its first jet, a Boeing 727, in cooperation with the French carrier.
The government has been considering privatising NAC or bringing in a strategic partner for the last decade. In 2007, it had initiated a plan to hand over NAC’s management to a foreign strategic partner so that it could reform and rescue the troubled carrier. However, the plan fell apart.
Presently, NAC holds a meagre 5.87 percent market share on international routes. It flew 206,430 passengers last year. It serves five international destinations and plans to expand operations to four destinations, namely Guangzhou, Dubai, Bangalore and Mumbai by this year.
NAC’s share in the domestic market stands at an even more miserable 2.41 percent. It flew 34,978 passengers in 2014. Over the last decade, the number of international destinations has been slashed from 21 to five reflecting the spreading malaise within the carrier.