Rescuing NAC

We wholeheartedly support the government’s initiative to convert Nepal Airlines Corporation (NAC), the national flag carrier, into a company by inducting a strategic partner with up to 51 percent stake. What is worth noting in this latest move is that NAC aims to maintain just 19 percent stake in the long run by divesting 30 percent of its shares in the domestic market. This is a long overdue move. Probably, this is now the only option that we have in our hands to save NAC from a slow but certain death.



One just needs to compare the balance sheets of NAC and Thai Airways, both of which began their operations at around the same time about 50 years back, to understand why a sea change is required to turnaround the flagging fortunes of our national carrier.



While Thai Airways continuously and rapidly grew over the last five decades to become a model of success, NAC, marred by rampant corruption and mismanagement, gradually shrunk. While Thai Airways can now boast of having spread its wings around the world, NAC’s days of glory when it used to connect Kathmandu to various key destinations around the world such as Paris, Frankfurt, London, major South East Asian capitals, among others, are behind it. The story of NAC’s fall from grace indeed is rife with examples on how not to run a business venture. While individuals occupying high positions in the corporation invariably made fortunes, the corporation itself always remained on the throes of death.



The latest decision of the government to turn NAC into a company is, therefore, quite refreshing to hear. However, we request the government to get down to doing it without any further delay as it will only give time to powerful interest groups and individuals with invested interests to play dirty games to maintain the status quo. This has happened in the past and there is no reason why it will not happen now. Various commissions in the past had submitted reports clearly suggesting that the only way to bring back NAC from the brink was to give the reins of the corporation to a strategic partner with managerial and marketing experience but that never happened as powerful lobbies worked hard to ensure that the idea never saw the light of day.



Nepal Tourism Year (NTY) 2011 is right at our doorsteps and this move of the government will hardly have any positive impact on it. Nepal, next year, is certain to feel the pinch of flight shortages if 1 million tourists, as targeted, or even lesser decide to visit the country. However, if the government can show grit and determination to see through the latest decision, NAC can gradually not only become a profitable entity but can reap bumper harvests if there is an influx of tourists during special occasions such as NTY 2011 given that it has already signed a number of Air Service Agreements to operate in many lucrative destinations around the world.

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