At the center of the controversy lies a promotional scheme called “pre-paid planning,” introduced by Cosmic months before it halted all its flights. Under the scheme, Cosmic had sold air tickets to travel agencies and tour operators at heavily discounted rates. And the only condition travel agencies had to fulfill to be eligible for the scheme was this: pay for the tickets in advance, i.e. at the time of purchasing the tickets.
The scheme was a lucrative one for travel agencies because they were getting tickets for sectors, such as Biratnagar, Pokhara, Bhadrapur and for international routes like New Delhi, at prices 50 percent lower than those being offered by other airline companies.
Taking advantage of the offer, various domestic travel agencies and tour operators had invested millions of rupees in the scheme. But after Cosmic terminated all its operations in July 2008, panic took hold among travel agencies and tour operators. That panic has now turned into anger after the company continued to default on its promise of giving refunds on the purchased tickets.
“At the time when the airline closed down its operation, we were consoling ourselves, saying Cosmic would pay back what they owed in due course of time,” one of the victimized travel agents, speaking on the condition of anonymity, told myrepublica.com. “But now we feel that the company is trying to take advantage of our patience.”
According to Nepal Association of Tour and Travel Agents (NATTA), Cosmic Air owes around two million rupees to some of its members. “But this number includes only companies that lodged complaints at NATTA. There are many more who haven´t approached us,” a source, from NATTA said. To pacify the annoyed travel agents, Cosmic has been issuing checks but according to sources, they bounce all the time.
Cosmic Air, established in 1997, has been in controversy now and then ever since November 2005, when it terminated all its operations after Nepal Oil Corporation (NOC) refused to supply fuel to the airlines. NOC had made that decision after Cosmic failed to pay debts of Rs 125 million to the oil corporation. It restarted operations after paying a part of the debt, but in October 2006, it had to suspend its operations again after its Fokker aircraft was grounded due to technical reasons.
In order to prop up its position and reputation in the market it then launched a price war. But it had dropped down its prices so much it couldn´t generate enough cash to compensate its day-to-day expenses.
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