Privatising Royal Nepal Airlines
Is It A Good Option?

By Manohar Rana

THE issues of privatising the state owned Royal Nepal Airlines had been in the media for quite a long time. The media recently, has flashed news that the council of Ministers has decided to convert RNAC into a public limited company. That means, 51 per cent shares retained by the government and the rest going to the people (private sector).

Report

In fact, the decision of the government to convert Royal Nepal Airlines into a public limited company is based on the report of a high level committee formed by the then government more than a year ago under the chairmanship of Mr. Damodar Prasad Gautam, Ex-chief Secretary, HMG/N. The committee was entrusted to find out the ways and means of improving the deteriorating state of Royal Nepal Airlines and running it profitably in the context of the national and global aviation scenario.
Nearly eight months ago, the Ministry of Tourism, Culture and Civil Aviation had formed a Committee under the convenorship of Dr. Shankar Sharma, the then member of the Planning Commission (presently the Vice-chairman), with the Secretary in the Ministry, Ms. Ridhi Baba Pradhan, as the Member-Secretary to suggest procedures/ modalities for implementing the suggestions submitted by the High Level Commission. This Committee had also submitted its report to the Ministry with two options. The first one is to initiate process of privatisation and hand over the responsibilities to the Privatisation Cell, Ministry of Finance. The second one is to divide Royal Nepal Airlines into two separate companies, one operating domestic service and the other, international services.
The airline was facing a high degree of interference from the previous governments till recently. These governments used to regard appointments of Board Directors and senior managers as their prerogative.Besies, they sere using such appointments as a reward for political patronage or as the gift of the government ministers. Such appointments have deprived Royal Nepal Airlines of competent management professionals at senior management levels. So much so, such interference also penetrated deeper into matters related to inter-and intra-departmental transfers, staff promotion, out-station posting etc. Such practices on the part of the governments have made disastrous impact on the airline. The accumulated operating loss (loans and dues) of more than 200 crores was enough as an evidence.

Because of the growing unpopularity of the government’s control of the airline industry, the move towards reduction of the state ownership started taking place globally. However, the privatisation trend took great speed only after 1980s. By 1990, formerly state-owned airlines such as Japan Airlines. British Airways, Air Canada and Air New Zealand were completely privatised. Airlines like KLM (Royal Dutch Airlines) have reduced the state shareholding to less than 50 per cent. The proportion of private shareholdings in Singapore Airlines and Malaysian Airlines has been increasing in spite of the fact that they were doing well under state control as well.

Royal Nepal Airlines is undercapitalised. Besides, it has to clear the dues and loans by itself, as the government has not expressed its commitments to inject further capital. On the other hand, it also needs to introduce a wide-body aircraft in its fleet in order to be able to meet the competition of the international operations. The DHC-6/300s. Twin-otters which it has been using for domestic operations, now need to be replaced by modern age aircraft. Moreover, it should also introduce one or two, 40 to 60 seater aircraft to compete in the domestic markets.

The main objectives of the privatisation are to increase efficiency and economy in operation, make the management accountable to the shareholders and to generate resources, both human and financial from the market to improve the operation of the enterprises. In line with these objectives, the previous governments planned to privatise, the line owned enterprises in different phases. In the first phase, they put about three state-owned enterprises under private ownership through divestiture. In the second phase, it privatised five more public enterprises by selling block shares to the private sector. Since then the government has been carrying out this process.

In fact, neither of the undertaking-Public or Privatise-is good or bad. It becomes good when the plans, programmes and goals of the undertaking are successfully met as expected and the overall objectives achieved as planned. On the contrary, if the outcome/result from its operation deviates from the plans or goals, the undertaking will then be termed as bad.

Thus, running state-owned enterprises under the banner of the private sector is not the solution for improving the affairs of an enterprise. What counts most is the ways in which an enterprises is being run and the expertise it has. Thus, privatising a state owned enterprise does not guarantee operational success.

However, experience shows that the state-owned airlines have become more efficient after privatisation as a result of being able to attract capable senior managers from the private sector. They have also been able to finance huge reequipment programmes without direct state subsidy or equity injections. Moreover, they have been able to get private loans on preferential interest rates without guarantee from their sponsoring government. The example of the British Airways will be instructive. In 1981, it was technically bankrupt because of its inefficiencies. But after privatisation, it has become financially strong and is being widely recognised as a formidable competitor these days.

Thus, looking at the present state in which Royal Nepal Airlines is going through and the level of managerial expertise it has, it will be wise to privatise the airline in order to give it continuity and to run it successfully in the coming years. But, outright sale of ownership to some individual/organisation will neither be in the interests of the country nor of its people. Therefore, the share of ownership should be allocated approximately in the ratio of 3.52.

That is, 30 per cent to the promoters (those who manage), 50 per cent to the general public and 20 per cent to the airline employees, so that a large number of people can participate in its management. If the government opts for some control, it may retain approximately one-fourth of the shares and allocate about the same percentage to the Promoters and the rest to the employees and the general public. But, if it wants to retain a stake of 51 per cent, the private entrepreneurs may not be willing or may shy away from investment. Because with 51 per cent of shares, the government would again have say in its management and may influence the activities in the same manner as in the case of state-owned enterprises. Our experience shows that the performance of such pubic limited companies has also been very unsatisfactory. Therefore, the government should initiate full privatisation by selling all its shares to the private investors approximately in the ratio as mentioned above or its should reduce its control to the minimal.

Priority

The local entrepreneurs also have the expertise and are competent enough to run business enterprises in a successful manner. Therefore, the government should give priority to the private entrepreneurs or business community of the country for a stake in the national flag carrier. It should design the processes modalities of privatisation in a way that encourages investment from the local/national entrepreneurs, rather than with the intentions of handing it over to the foreign parties (investors). By doing so, the government will not only provide the private entrepreneurs will an opportunity to prove their competence but will also help to run the airlines with the participation of its own people.

Men, Women And Power

By Anjali Subedi

MATTER is simple, it is the matter of power. Men and women, the gender discrimination is nothing, but the matter of power.

The gender conscious voices blame that the attitude is biased. Sometimes it is said that language itself is male dominated. It has been a fertile land for discussion. Different NGOs, INGOs and the government sectors are seen working on gender discrimination, in favour of women, freeing them from male domination, enabling women to use their right etc.

Our country, which falls in the third world, falls far behind on its achievement, education, philosophy, use of logic and reason too. People are dependent on thoughts and views. They follow the readymade track without doubts, questions and inquires. Some love to move on whim. And the youngsters of the nation are just looking for a secure future.

Some really burn like fire that women are dominated. They raise voice and call for change. Revolution, they desire. They believe that united voice and effort brings success. In fact, they seek power. Yes, the matter is of power. Power is what makes you ‘You’. Poer is what discriminates gender. Biological factor discriminates sex. Social role discriminates gender. And power discriminates the social role.
What sort of power works then? It is quite clearly the economic power. Economy decides who is the boss and who is the subordinate. Economy labels you. Economy defermines your position at home, and outside. You cannot be the best son at your home, you cannot be the best daughter; you cannot be the best wife or the best husband when you are financially weak. No matter you need some other qualities too to win the best award but the financial weakness inevitably comes above all other types of weaknesses.

Political power works vividly in every sector. Laws, decisions, plans, implementation and the overall maintenance go under political shadow. Women are backward for they are politically never ahead. They are not elected and seen in power as equal to men. It is not the matter of inability, less interest or chance. It is only the matter of financial structure. In today’s world practice, men are in control of economy, earning and spending. Simply and financial power affects the political power and the social structure.

Political power enables you to express yourself. It provides you the loudspeaker, and the audience. You utter, you’ll be heard. A little cleverly you act, you will be appreciated. Sometimes your voice surprisingly appeals to many leaving yourself in wonder. Soon, you will be a public figure. Bring something new or have a connection with more powerful agency, you will be heard regularly. Your ideas, you dieologies, philosophy, discourse begins to make an effective impact. It is nothing, but the game of power.

Not only through politics, you may come through the free called agencies or means, like mass communication, musical bands etc. But remember, at the back, at the ground, only one thing works, only one thing acts, and that is power. In this way, power is really great and often invisible. But as powerfully as time it works everywhere. It dominates the whole society. It shapes your thoughts, it regulates your activities, it uses you automatically. The result, you believe, work, and move on the expected ways, readymade ways.

Look at home, how power works. Mother’s psychology, father’s psychology, son’s psychology, and the daughter’s psychology, the four types of consciences interact. But all these consciences are dominated by the social sttucture. Generally, father is the dominant person, after which the son or the mother keeps the dominant voice. The daughter is felt to be less important and less concerned. But the very daughter is expected to be more conscious and more careful about herself. She is not supposed to roam around much, not to be mixed up with others etc. She is the best if she is descent and self disciplined. Every home expects it and so society expects it. Disorder takes place if the daughter revolts or liberates herself. The daughter could be of more potential, more wiser with her own agreements and disagreements concerning social values, and the guardians might be of no capacity to understand her. Let’s say that the daughter is simply independent of thought and action. But she will rmain unnoticed or either misunderstood. Hence the daughter can hardly save herself from the omnipreent human power which is at present and from centuries been on the side of the male.
I personally do not believe in gender. ‘Sashu’ and ‘Buhari’ fight not because they are women but because they are ‘Sashu’ and ‘Buhari’. It means because they have to perform the very role. The role of ‘Buhari’ you think how faint and how hard it is. And the role of ‘Sashu’, crossed already from the former phase is more complex.

The expectations, the oddness, the formalities are the basic enemy. Trying to get out of the formalities and the difficulties, the girls sometime kick out the duties too. Similarly, the ‘Sashu’ too not knowing how to react, turns hard. And the relation really turns absurd. And this is never because they are women but because of the social criteria, the structure, and the long practiced male power.
When the role is reversed for the male and female, when the male will be working at home and the female earn for the family, when the male becomes ‘Buhari’ or has to obey his ‘Sashu’, do anyone doubt that the man too will begin to cry, will be irritated of the social practice?