Nepal Airlines Corporation (NAC), the national flag carrier, is facing a critical situation, teetering on the brink of collapse. Both of its wide-body aircraft have been grounded, with the narrow-body fleet expected to follow soon.
One of the wide-body aircraft was sent to Italy for routine engine maintenance (C-check) over two months ago and has yet to return. Meanwhile, the second wide-body aircraft is also grounded due to its scheduled C-check. This leaves NAC with only four aircraft for international flights, which previously serviced 10 destinations worldwide.
Taking advantage of NAC’s current predicament, foreign airlines operating in Nepal have significantly increased airfares. Sources report that flights to Japan, Thailand, and Bangalore have seen up to a 20% hike in prices.
The current Executive Chairman of NAC, Yuvraj Adhikari, has been accused of deliberately weakening the corporation to benefit foreign airline agents operating as General Sales Agents (GSAs). A union official from NAC claimed that the extended absence of the wide-body aircraft, which was supposed to return after a month, is part of a larger conspiracy. The official also pointed to irregularities in the selection process for Maintenance, Repair, and Overhaul (MRO) services, suggesting that these issues stem from manipulation during the selection process.
Despite facing significant opposition, NAC managed to procure four new aircraft through a global tender process. However, the then-Executive Chairman Adhikari, who was the Head of Accounts at the time, was accused of obstructing this process. Major aircraft manufacturers and their local agents reportedly used political and administrative influence to block the acquisition.
The union official also highlighted that despite these efforts, NAC’s debt burden remains high, with nearly NPR 50 billion still owed to the Employees Provident Fund and the Citizens Investment Trust for the purchase of the wide-body and narrow-body aircraft.
Since both wide-body aircraft have been out of service since late August, NAC has been incurring daily losses in the millions. Foreign airlines have capitalized on this situation, raising airfares significantly during the peak Dashain season.
A source within NAC expressed concern, stating, “We are increasingly feeling that the Executive Chairman is deliberately trying to bring NAC to its knees. With few aircraft left to operate and ongoing maintenance issues, the reputation and credibility of NAC are at serious risk. If this continues, how long can NAC survive?”
The NAC staff accuse the Executive Chairman of colluding with foreign airlines to disrupt NAC’s regular flight operations, thereby paving the way for its downfall. With one wide-body aircraft still in Italy and another grounded due to pending maintenance, the situation has allowed foreign airlines to dominate the 10 destinations where NAC used to operate, leading to exorbitant fare hikes.
Allegations of Tender Manipulation: The tender process for selecting a company to conduct the C-check, announced on May 15, 2024, with a 15-day deadline, has also come under scrutiny. Despite serious flaws in the bid submitted by Atitech, a company selected to perform the C-check, NAC sent one of its wide-body aircraft to Italy for maintenance. Another bidder, GCAM, had offered to complete the maintenance at a lower cost within 20 days, but the contract was awarded to the Italian company instead.
GCAM filed a formal complaint alleging fraud in the tender process, but no investigation or action has been taken so far. The aircraft, identified as 9N-ALY, was sent to Italy on June 22 without proper documentation, a performance guarantee, or approval from the Civil Aviation Authority of Nepal (CAAN). While CAAN initially suspended Executive Chairman Adhikari over this issue, he was later reinstated under questionable circumstances.
NAC sources allege that instead of resigning on moral grounds after CAAN’s punitive action, Adhikari has been working behind the scenes to secure his position by offering financial incentives to union leaders, ministry officials, and political figures. Culture, Tourism, and Civil Aviation Minister Badri Pandey has stated that although Adhikari’s actions have further weakened NAC, the Supreme Court’s interim order reinstating him prevents any action from being taken against him.
Despite NAC’s ongoing struggles, Adhikari remains in his post, even after a government decision to remove him two years ago based on the recommendation of then-Tourism Minister Prem Ale. Over the past two years, NAC has seen three Prime Ministers and five Tourism Ministers come and go, yet Adhikari has remained in power.
Critics argue that under such governance, NAC’s chances of recovery are slim. A union official commented, “How can NAC improve when failed and discredited individuals are put in charge? We have only four aircraft for international flights, but we are being promised new routes to Australia. This is nothing but empty talk.”
Political interests have further complicated the situation, with the judiciary being used as an excuse to avoid taking responsibility for NAC’s downfall. According to NAC sources, significant irregularities have occurred in aircraft maintenance, procurement of spare parts, and the sale of tickets by travel agents. These sources also allege that millions of rupees are collected monthly from foreign airlines’ GSAs and NAC-affiliated travel agents, which are then used to bribe union members, ministerial aides, and journalists in the aviation sector.
