Saving RNAC

THAT an overwhelming number of speakers at an interaction on National Civil Aviation Policy and RNAC’s Future favoured privatisation of the national flag carrier should come as no surprise. The suggestion for privatising RNAC has come forth from tourism entrepreneurs and aviation experts over the years regularly because of the gross mismanagement that the national airlines has functioned under especially during the 1990s. Telling facts and figures that reinforced the downward slide that RNAC has experienced over the past decade again emerged at the interaction. RNAC’s fleet has come down to nine—two Boeing 757s and seven Twin Otters—from 18 including a pair each of Boeing 727s and Boeing 757s in 1987. Truncated fleet drove it to cut out European, Singapore and Dubai routes last September. It has an overdraft of Rs. 1 billion and another Rs. 1.5 billion liability. Monthly loss in its domestic sector runs a huge Rs 10.5 million. It has not brought out its balance sheets for the past four years.

The above makes it pretty clear that RNAC is in dire financial straits and faces an uncertain future. Hence a call for privatisation seems reasonable. But there are other considerations too that need to be taken into account. RNAC suffers a huge loss on its domestic sector precisely because it sends its planes to places in remote Nepal where other private airlines would not go because of lack of financial viability. In that sense, it provides an important national transportation service. How’s that factored into a privatised RNAC? This is clearly one of the concerns behind Minister for Tourism and Civil Aviation Bal Bahadur K. C.’s assertion that the country does need a national flag carrier and that restructuring of its internal management should be a priority. Proponents of RNAC privatisation would do well to realise that the choice is not just between wholesale privatisation and wholesale governmental ownership. There are a number of ways of privatising a public sector undertaking without relinquishing all the social responsibilities of a carrier of this nature. In fact the national policy on civil aviation brought in soon after restoration of democracy clearly stated that international operation of the national flag carrier should be gradually privatised. In any case, it has become quite crystal-clear that RNAC needs a life-saving operation if it is to stand on its feet again, either as an autonomous, restructured and well-functioning public enterprise or as an entity in the private sector.

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