The national carrier earned total revenue of Rs 163.9 million from both domestic and international sectors during the year. But expenses crossed Rs 264 million during the period, mainly due to rise in fuel prices. Of its total expenses, NAC spent more than Rs 110 million on fuel alone.[break]
NAC had faced loss of Rs 200 million in 2009/10. During the year, NAC´s revenue was Rs 187 milllion against the total expenditure of Rs 387 million.
Though NAC is making profit in international sector, it is the domestic flight that is pulling the national flag carrier into red.
“The return from domestic sector is less than half of our investment in the sector. The operating cost of fights in hilly districts in the mid-western region is very high,” KC said, adding that the obligation of operating flights on rural routes and shortage of aircraft for trunk routes was costing the national flag carrier dear.
“In average, we are facing loss of Rs 200 to 220 million in domestic sector,” an official at NAC´s financial department said.
According to statistics of Tribhuvan International Airport (TIA), the national flag carrier enjoyed meager 3 percent market share in domestic sector and 5 percent in international sector in 2011.
Similarly, its contribution in bringing tourists is also on the wane. Though tourist arrivals to Nepal via air is on the rise, NAC´s contribution in total tourist arrivals declined to just 5 percent in 2011. It contribution in total tourist arrivals stood at 28 percent in 2001.
“The major reason behind the decline in our contribution in total tourist arrivals is the increasing competition and growing number of foreign airlines with modern fleet,” KC said, adding, “Our international flight network is shrinking. With just two aircraft, it is difficult to provider regular service,” he added.
NAC stopped flying to European destinations since 2001. Similarly, it withdrew flights to Shanghai and Osaka four year ago owing to shortage of aircraft.
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