KATHMANDU, March 7: The airline operators of Nepal have decided to proportionately ground their aircraft as the demand of air service is likely to decline due to the impact of the global coronavirus crisis. Yog Raj Kandel, spokesperson at the Airlines Operators Association of Nepal (AOAN) said that, the decision comes in the wake of the need to minimize the flying cost of aircraft. “Our proposition is to use aircraft as per the requirement to control the operating cost,” he said, “This time of the year is already an off-season for tourists and with the fear of coronavirus, aviation industry has been hit hard.”
The meeting amongst the airline companies held on Thursday decided to encourage their staff to get unpaid leave and deduct the facilities provided by the company for the staff. The AOAN has proposed 20% deduction on salary amounting to Rs 30,000. For the additional Rs 20,000, the companies have proposed the deduction of 30% and 40% for the additional Rs 50,000. Similarly, the AOAN has proposed 50% salary deduction for staffers who earn above Rs 70,000. The companies will however not deduct the salary if the earning is Rs 20,000 or less. “The deduction will be applied only if the staffers are on leave,” he added. “They will be working alternatively with their counterparts in the company.”
The International Air Transport Association (IATA) has estimated a loss amounting to US dollar 29 billion in the aviation sector. Similarly, In Nepal, the earning of aviation sector is expected to go down by Rs 4 billion. According to Kandel, air movement of international tourists has decreased by 40% in the first two months of 2020.
A staff of a private airline company asking anonymity said that, the occupancy rate of the flights has drastically decreased, in some cases, up to 85%. “Similar to other industries, the aviation industry has not remained exempt from the impact,” he told Republica, adding, “The disparity in supply and demand chain has hit the airlines companies. With nationwide cancellations of programs, the air movement has been impacted.”
However, some airline operators say that the aircraft operating in trunk routes have not reached the situation where they need to get their aircraft grounded. “Domestic passengers occupy the seats in the trunk routes,” said Rupesh Joshi, sales and marketing Director at Buddha Air, “Currently we have 90% occupancy rate in the trunk route and the problem exists only in short take off and landing aircraft (STOL) and helicopter bookings.” Stating that the occupancy rate in the trunk route is still good, he said that, the propositions made by the AOAN is just a step of preparation if anything worse happens in the future.
Indicating the impact of coronavirus, the AOAN has requested the settlement of interest payment through Nepal Rastra Bank's refinancing.
It has asked the government to manage the provision of interest and capital payment in Nepali rupees for the loan taken in dollars. The AOAN has suggested the government to remove the value added tax (VAT) on aviation fuel imposed by the government and reduce the price of the aviation fuel by 30%. The situation is going to have direct impact on the aviation industry for six months, according to AOAN.