Way to revive NAC

Published On: September 11, 2019 02:00 AM NPT By: Republica  | @RepublicaNepal

By all means, Nepal Airlines Corporation (NAC), the only and the oldest state-owned airlines company of the country, is in a sorry state. In recent times, the national flag carrier has hogged the headlines for all the bad reasons: wide-body purchase scam, billions of loss, mismanagement and corruption. The situation is such that unless the government does something to bail it out, NAC is likely to become the major story of failure of public entity in Nepal. Come to think of it, NAC incurred a loss of Rs 2.4 billion in just two months—between January and February this year—according to the study report of International Relations Committee of the parliament. Losing such a huge amount of money just in two months is really alarming. But this is happening with troubling frequency. Scandal aside, wide-body aircraft was expected to earn some profit for NAC. But in one and half months—between August 1 and September 15, 2018—NAC had incurred the loss of Rs 491.8 million. It is in serious debt, so much so that NAC management demanded immediate financial support from the government to avoid a major financial crisis and cash crunch in November last year.

In this context, the International Relations Committee of the parliament has instructed the government to reshuffle the existing management of Nepal Airlines Corporation (NAC). Its conclusion: Current management is not capable of running the institution. Based on the study of its subcommittee, the parliamentary committee has asked the government to make “structural changes” to the board of directors of NAC. “Individuals with professional integrity and high decency should be appointed to the board of directors of NAC,” the committee has recommended. It has also advised creating a supervision team comprising experienced individuals for guiding the NAC board and management. We believe that this could be one of the ways to revive NAC from the state of doldrums, if indeed the competent individuals with proven professional integrity are appointed in NAC. We have had at least a couple of success stories of sick public entities making impressive recovery under honest and competent leadership.

Take Nepal Electricity Authority. The public utility company had suffered years of loss and mismanagement. Mostly because of its poor management, the country had to face as many as 18 hours of power cuts a day for many years. Then came Kul Man Ghising as the Managing Director and things began to change much faster than anticipated. Now largely because of efficient and competent leadership of Ghising, NEA is not only recovering losses of the past but it has also started to make annual profits. Nepal Bank Limited and Rastriya Banijya Bank, two other sick public entities of the past, have gone in profit. So what worked well in these entities?  Good leadership? Proper management? Perhaps NAC can look up to these entities and replicate the methods they employed to revive themselves. The government should explore all options to prevent NAC from collapse. This will be instrumental in making Visit Nepal Year 2020. successful. It is incumbent on the government and the newly appointed Tourism, Culture and Civil Aviation Minister Yogesh Bhattarai to come up with viable plans to rescue the NAC. The recommendation of International Relations Committee of the parliament has something to offer.

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