Cover Feature

Growing Competition,But With Limitations

Easy to enter and easy to exit. That is how the airlines business seems to be in Nepal, at least to date. Among the 30 odd companies registered as airlines, only 15 are actually in business. Of the rest, some have closed down the operation, while others have been just clinging to the license for quite some time without operating even a single flight.

Civil aviation is a capital-intensive industry, requiring a huge investment for acquisition of the craft, training the manpower and setting up infrastructure for craft maintenance. However, this has not worked as a real barrier for all types of players from entering the market. Craft are available on lease. Manpower from existing airlines within and outside the country can be attracted by offering better service conditions. And who cares if you do not have a maintenance hangar of your own as long as you continue flying the leased craft!

The result is an industry with a horde of firms that have no long-term commitment in the business. Nagendra Ghimire, Director General of Civil Aviation Authority of Nepal (CAAN), however, distinguishes between two types of airlines, calling them serious ones and not-so - serious ones. While the former types have developed and sustained their business, the latter types have closed down, concludes the CAAN chief.

Commenting on the situation, Deep Mani Rajbhandrai, Chairman and MD of Necon Air, calls for policies so as to ensure that only professional companies with professional fleet are granted a license. "Presently even those companies are given license, which do not have a single aircraft, let alone a professional fleet of aircraft," he says. Talking along almost the same lines, RP Pradhan, Chairman of Cosmic Air, suggests that a few airlines should be given the license and they should be able to operate a large fleet of airplanes. "On the contrary you have here 15 private-sector airlines flying mostly with one or two aircraft", he adds. Similar are the views of Prajjwal Shrestha, Executive Chairman of Gorkha Airlines, and Bikas Rana, Chairman of Fishtail air.

After the country started with the policy of economic liberalization in 1992, the growth that the ensuing period brought about is most distinctly visible in two-sectors - banking and aviation. But the companies in both the sectors are being criticized for not fulfilling what was expected of them. Both have not expanded their services to remote areas.

It was private sector competition that HMG had expected to promote in civil aviation when it opened the sector for entry of private airlines. And the present situation is such that the competition is intense among the airlines in some routes they fly, (thus benefiting the passengers to these routes) while some other routes are quite left out.

Mountainous and remote destinations, where tourism has not developed, are such areas that still have to depend on the state-owned airline. Thus, while the ‘tourist sectors’ like Jomsom, Lukla, Bharatpur and mountain flights and commercial towns like Biratnagar, Nepalganj and Bhairahawa have experienced ever growing seat availability, remote destinations like Bajura, Dolpa, Chaurjahari are still suffering short-supply. Similarly, international operation is the other sector where Nepali airlines have failed to deliver the expected result.

However, the private airlines operating domestic flights argue that they cannot be blamed for this. The government’s decision to license operators in international routes without proper homework and its faulty framework of airfare in the domestic sectors are pointed out as the crux for the problem.

Rules require the airlines to conduct at least 40% of their flights on social sectors. The remaining 60% of their flights can be allocated on tourist sectors. But, as the social sector does not mean only the remote areas, the companies are fulfilling this obligation by flying to Biratnagar and Bhairahawa instead of increasing flights to Dolpa or Chaurjahari. And the reason for this is the fare structure, agree both the airline operators and the regulatory authority.

CAAN has fixed the fare on the basis of the operating costs of RNAC which flies Twin Otters that have now become quite aged and have their book value reduced almost to ‘zero’. Thus the depreciation charge on them has also reduced to almost zero. Ghimire says that it was a compulsion on the part of the authorities to base the fare on RNAC’s operating costs because none of the private airlines, except one or two, submitted their operating costs. Considering the faulty base of the fares, the airlines have been allowed to go up or down 30% of it. But as Ghimire points out, almost all of the companies have by now reached the ceiling already.

To solve the problem, Ghimire says, CAAN has devised a formula to subsidise the flights to remote areas by raising levy from flights to other destinations. The proposal was developed with consent fo AOAN, (Air Operators Association Nepal) and it is now awaiting approval of the Ministry of Culture, Tourism and Civil Aviation.

Another reason for companies not flying to the remote areas is the infrastructure. Shivendra Basnet, Managing Director of the newest airline Mountain Air, says his company does not like to fly to even Bharatpur, though it is a tourist destination and thus the fare is high enough. Basnet’s aversion to the airport is because of its grass runway, which results into high maintenance cost for the craft. The company has brought on lease two Beech-1900c craft costing US$ 3.8 million each. The rent the company has to cough up every month is US$ 37000. Hence it is a costly proposition to increase the maintenance bill.

In the absence of the incentive to fly to remote areas, the airlines have been competing with each other only in the remaining sectors: The mountain flights, flights to tourist destinations, and flights to the business destinations. The result has been increased seat availability in such sectors and reduction in fares.

The example for reduction in fares is being experienced right now with the onset of the rainy season. In the past, RNAC would simply increase the frequency of flights to all-weather airports during the rainy season by stopping to fly to fair-weather airports. Now the private airlines have also been offering discounts on the fare together with reallocation of flights. This summer, as the advertisements from the airlines indicate, passengers to some all-weather airports will enjoy upto 30% discount on the standard fares.

This was possible because, unlike in the case of RNAC, the private airlines have been able to provide regular and reliable service. Rajbhandari for example claims that his company has 99% flight dispatch reliability. This further has resulted into very high seat occupancy. Necon, Cosmic, and Buddha Air claim that their seat occupancy averages 70%, 85% and 90% respectively. Higher seat occupancy is in turn an encouragement to increase flights, which calls for fleet expansion.

Competition on fares is benefiting not only the passengers. Travel agents also have found their bargaining position become stronger vis-a-vis the airlines. As Rajbhandari says, some airlines are giving out excess discounts to travel agents. However, this is not a healthy trend, he says adding "because there is simply no end to a commission war". And this may also result in compromise in flight safety.

Ghimire says that while safety has to be the first concern of a company in aviation, with regularity and economy taking the second and third position respectively, the airlines being commercial ventures, may give top priority to economy. That calls for stricter rules and supervision from the regulatory body. Ghimire also points out that if the operators do not center their attention on safety, there will be no growth in terms of economy. "Because passengers naturally tend to prefer to fly by an airline that has good safety records," says Ghimire.

Analyzing the safety aspect of civil aviation of Nepal, Ghimire says that as everywhere in the world, aircrashes in Nepal too are mostly due to human error, rarely due to failure of aircraft machinery or that of navigational, communicational or other equipment installed by civil aviation authority.

Airline operators agree to Ghimire's assertion that human error is the primary cause for the accidents. Bikas Rana, Chairman, Fishtail Air, a helicopter charter company, is himself a pilot, and recalls his experiences of how he managed to avoid several air disasters. His feat in averting such a disaster while dispersing the ashes of Late Prime Minister Man Mohan Adhikary was widely acclaimed and reported in the media.

The flights here are conducted on the "see and seen" basis, which means the pilots have to avoid entering clouds. But not realizing that denser cloud might have formed on the other side, the pilots cannot resist entering the cloud assuming it for a small patch. The plane being at high speed and the terrain being close, the possibility of crashing into the mountain is great. Therefore, Ghimire says, CAAN is thinking to make it necessary to install advance ground proximity warning system in the aircraft.

Airline competition, however, is not limited to price war. Compared to the recent past when airline ads used to be only for announcing seasonal change in the flight schedules, now they are using advertisement media to influence the people’s selection.

Apart from media use, airlines are also going into sponsorships. The latest example in this is Gorkha airlines that sponsored Babu Chiri Sherpa’s expedition to Mount Everest, which Sherpa completed in record time of 16 hours 56 minutes.

One of the major strengths that the companies are projecting in their marketing drive is related to the craft. Companies that fly new craft can be seen getting a competitive edge over those flying second-hand machines. In this regard, Buddha Air can be taken as an example. In its marketing drive, it has especially been focusing on the fact that all its Beech 1900 D craft are "brand new", that they are the fastest and that they can go very high - above the clouds. Thus, the mountain flights in Buddha Air are spectacular, it claims.

Mountain flights being the most lucrative of all the sectors, most of the airlines are focusing in this segment, particularly while deciding on the equipment purchase. Of the eight private airlines operating fixed wing services at present, five are conducting mountain flights. Whether it is the Dornier craft of Cosmic Air or the recently added ATR craft of Necon Air, the deciding factor seems to be the mountain flights. While Cosmic Air in its Dornier guarantees every passenger a window seat, Necon’s ATR has wings high above the passenger seats, thus ensuring an unobstructed view. Another consideration in deciding about the craft is the terrain, and that explains why Twin Otter craft seem to be favoured by most airlines.

In international flights, though five private airlines are licensed, only Necon has been actually operating the service. Though the other companies could either not be contacted, or did not respond when contacted, Necon’s Rajbhandari explains that only getting the license is not enough to operate international flights. The requirements in terms of manpower and investment are too demanding for everyone to be able to fulfil, Rajbhandari opines. Cosmic Air’s Pradhan too expresses his views in similar lines.

Looking at both the domestic and international operations of Nepali private sector airlines, though the scope for expanding their business seems to be present, what is called for is further refinement in the rules on the basis of experience of the last eight years Both private sector operators and the regulatory authority seem to have a consensus on this.

By Madan Lamsal

Airlines operating in Domestic Sector

Sources: Business Age

1. RNAC (Actually flying)

2. Necon Air (Actually Flying)

3. Nepal Transcontinental Airlines

4. Everest Air

5. Air Nepal International

6. Alpine Air

Airlines Closed Down

1. Nepal Airways

2. Everest Air*

3. Himalayan Helicopter

4. Lumbini Airways

5. Manakamana Airways

1. Nepal Transcontinental Airlines

2. Everest Air

3. Air Nepal International*

4. Alpine Air

Coming Airlines

1. Dynasty Aviation - helicopter

2. Aeron air - helicopter

3. Garud Air - helicopter

"We’re the most punctual"

Deep Mani Rajbhandari
CMD, Necon Air

Necon Air has been doing well given the fact that we are the market leader in the domestic sector with approximately 55% of the total market share. Our flights have average 90% occupancy. Business has definitely been affected to a certain extent by the suspension of IA flights as the inflow of Indian tourists has decreased by about 50% since January 2000. But on the flip side of it, our Patna and Bhairahawa routes are doing very well, and in a way substituting the IA flights indirectly.

Airlines are accused of forming a cartel and revising tariff together. What is your comment?

In such a competitive market situation where everyone is trying to gain market share, it is not possible to form a cartel.

What is your fleet expansions plan?

The investment in our company has increased with 30% rise in equity due to the recent right share issue. At present we are operating three HS 748 AVRO, one ATR 42, and one Cessna Caravan aircraft for cargo and charter purposes. We plan to add more ATR-42 aircraft to our fleet by the end of the year. The ATR-42 are modern, state of the art and the most successful turbo prop aircraft of its class.

How do you view the growth in the number of airlines in the country?

To a certain extent it is a healthy sign because this results in competition and the quality of service will improve. The customers will also have more choice and the frequency of flights will increase. But after a certain point, when the number of seats offered exceeds the demand, the competition tends to get unhealthy because everyone is trying to gain maket share at any cost. This could result in a compromise in the safety standards and an undue emphasis on commission. From what I know some of the new entrants are giving out excess discounts to travel agents just to gain market share. This is definitely not a healthy trend because there is simply no end to a commission war.

How do you comment on the existing policy and attitude of HMG regarding airlines business?

HMG should open up international routes to the private sector. However, HMG should set out policies where only capable airlines that are seriously interested in operating in the international sector are considered. In the domestic sector also, the policies regarding new entrants should be revised.

What are the major selling points of your company?

The selling point of Necon is our dedication to provide the best service possible to our customers and our experience in this field. Our history dates back to September 1992 making us the most experienced private airline in the country. We have a flight dispatch reliability of over 99%, meaning that there is not even 1% chance of our flights getting cancelled. Further, we have earned the reputation of being the most punctual domestic airline.

Why have not Nepali private sector airlines been able to conduct international flights despite this sector being open for quite a long time?

Necon Air is the only private sector airline that is operating in the international sector. But just getting the approval from the civil aviation authority is not enough to operate international flights. One needs experience, professional staff and a good fleet of aircraft to operate international flights successfully. Because the requirements both in terms of aircraft and professional staff, are very demanding to operate international flights other.

Is your company planning to expand its international operations?

Yes we are. We will be introducing Varanasi to our network most probably by May 2000, which will be followed by introduction of Lucknow very soon. For the future, we are planning to operate flights to Delhi and Bombay (subject to permission from the Indian Govt).

"There is still scope for serious players"

Nagendra Ghimire
Director General, CAAN

Viewing the positive side of the development, passengers have been better facilitated. The only problem now is that they have not been able to reach and provide service in all the remote areas. Concentration is more on the tourist sector. But that is by no means negative because without the presence of the private sector, it might not have been possible to cover all tourist destinations. Looking at the negative aspects, the kind of sustainable development that was possible, has not taken place, be it in terms of manpower development, professionalism or investing in physical facilities. Of course we are not talking about every airline. Some airlines are operating in a very smooth manner.

How do you evaluate Nepal’s civil aviation in terms of flight safety?

We are trying to ensure the year 2000 a zero-fatality year. And thank god, the first four months of the year have passed with zero-fatality.

What measures have you planned to achieve that?

Safety and security is a wide field, which cannot be entirely covered through the efforts of CAAN only. That responsibility has to be shared at every level. Everyone involved, from the loader to the pilot and the engineer to the hotelier providing food in the plane has to share the responsibility. Lapses at any level could hinder safety and security. It is not possible for CAAN to inspect every flight. CAAN has set a regulation and asks all the airlines to prepare their operation and maintenance manuals, according to the regulation, which is quite flexible to suit all airlines, big or small and operating different types of aircraft. CAAN approves the manuals that the airlines may follow. We have also been thinking in terms of upgrading regulations. It has become necessary to install the advance ground proximity warning system to safeguard planes from hitting the mountains.

It is said that there are no definite criteria set for licensing an airline. So everybody is getting the license. What do you say?

The decision regarding allowing any individual to establish an airline company is taken by the government. And then when he comes to us for the air-operating certificate, we see if that airline is able to sustain itself for three months on zero revenue.

Have you formulated any plans to encourage airlines to operate in remote areas?

It is unimaginable reality that here people have the facility to fly for a mere Rs. 400. The price of fuel and other commodities have gone up significantly over the period, but the fares have still remained very low. CAAN Board has decided to collect contributions from airlines on different mountain and tourist flights and utilize the fund to subsidize flights to remote areas. The Board has passed the proposal and has forwarded it to the ministry for approval.

Some airlines are not using their AOC to conduct international flights. How do you assess the situation?

From the point of view of the airlines, they could not get sufficient routes and seats. From our viewpoint, we could only allot to them what was available under ASAs signed. We also had to treat all operators on equal terms. May be if any airline had started operation, seats that remained unutilized could also have been allotted to it. But that just did not happen. Necon Air has been demanding that its seats be increased and we are talking to authorities in India to do so.

There are also complaints that authorities are too much protective of RNAC while allotting routes?

Instead of flying in the same routes and competing with RNAC, the private airlines could explore other markets. So we also expect private airlines to make developments in other routes. However, it is not true that we are conservative in opening up routes covered by RNAC. Bangkok and Bombay are, for example, open for the private sector airlines.

Voices have also been raised about over-issue of license for airlines operation.

When you have adopted the open sky policy, you cannot issues license to only some. What can be done is that a number of requirements can be set, and anyone that is able to satisfy those requirements should be allowed to operate an airline. There is still scope for more airlines or aircraft because remote sectors still need to be covered. The problem here is that of lack of professionalism. So there is in fact need of serious players in the business.

Anything else you would like to share with us?

In order to increase the activities of civil aviation, there is need for the development of a second international airport in the country. There are limitations for expansion of the existing one while there is a good scope for the second one. Feasibility studies have been carried out in eight places. Voices were also raised for consideration of an airport at Lumbini. In this context, we are nearing completion of the study of that airport as well. Then it is upto the government to make a decision on the second international airport in the country. The point I want to make is that a second international airport is an immediate requirement since all aviation activities are concentrated here in Kathmandu. Once the second airport becomes a reality, the entire scenario will change.

HMG and CAAN should be more vigilant

Prajjwal Shrestha
Executive Chairman,
Gorkha Airlines

It has been observed that 99% for air crashes has been caused due to human error, not by technical or weather reasons. Therefore, it is important to have good and experienced pilots. We have pointed out to HMG/N that before giving permission to a pilot, it must be assured that the candidate has completed at least I.Sc. with mathematics background. Besides, there are old versions of aircraft entering into this country in large numbers and HMG/N should be vigilant enough to check these anomalies.

Airlines are accused of forming a carted and revising tariff together. How is your comment?

It is a well-known fact that air tariff has not been increased from 13-14 years in spite of the acute yearly inflation. In various sector, there is hardly any difference between travelling by bus or by air. But it must be taken into consideration that it is more time saving and relatively safer too to travel by air than on land. Moreover each passenger is insured. There has not been any official comparative study in Nepal about the data of the passenger fatality travelling by surface transport and air transport. In my personal opinion the existing air tariff has to be increased and in the social sector HMG/N must subsidize.

How do you view the growth in the number of airlines in the Country?

Definitely, I will not object providing license to new airline by HMG/N. However the monitoring and evaluating system of CAAN has to be improved simultaneously. It is obvious that airline is a capital and man power intensive service industry. Hence CAAN has to make definite criteria and screen the company before providing license.

In the absence of capability of the government, what do you think that the private sector can do to improve physical infrastructure in aviation?

The private sectors can improve only small component of physical infrastructure like improving the airfields and opening new helipads. Our company will assist and co-operate in such works so as to facilitate the passengers and safety of the aircraft. And that we have been doing in various STOL airfields already.

 "Encourage bigger airlines"

R.P. Pradhan
Chairman, Cosmic Air

How is Cosmic Air’s performance under the present circumstances?

At present, there are more than 35 aircraft operating in the domestic sector. Since Indian Airlines suspended its flights to Nepal, there has been a decrease by 7 percent in the international flight to/from Nepal. The entire tourism sector has been directly or indirectly affected by this, as has the airline sector. We hold 11.5 percent market share in the domestic sector. Moreover, out of the 12 or 14 flights to Jomsom, we have 40 percent market share while our market share in Bharatpur flight is about 50 percent. We have attained 14 percent growth over the last year. Thus, considering the present scenario, Cosmic Air is doing pretty well.

What are your plans for further expansion of the fleet?

We started operations with two MI-17 helicopters. We then began our fixed wing operations with a Dornier 228 aircraft. Last year we added a second aircraft. Now we want to operate in the trunk route, that is the flight to Pokhara, Bhairhawa, Biratnagar and Nepalgunj. As of now, we are only flying to Pokhara among the trunk routes since with only 2 Dornier aircraft, we do not want to spread ourselves too thin. We also want to operate exclusive mountain flights. For that purpose, we are looking for appropriate equipment. We have, in fact, almost decided on that. We are bringing in more aircraft, which will enable us to operate in these sectors.

At the moment, our occupancy rate is 85 percent. Once the occupancy rate touches 70 percent, that normally indicates the necessity to add flights.

How do you see the growth in airlines business in Nepal?

The growth that has been taking place is quantitative growth, which is normally a negative sign. What we need is qualitative growth. By this, I mean that a few airlines should be given the license and they should be able to operate a large fleet of airplanes. On the contrary, you have here fifteen private sector airlines flying mostly with one or two aircraft. We have more airlines operating here than in India. So, are we actually going in the right direction?

How is that argument going to be compatible with liberal economic policies?

Airline is not a commodity producing industry. This is directly linked with safety, and so this calls for professionalism. Infrastructure also is of great importance, in relation with maintenance, operation, training, and so on. In this context, small airlines will face a lot of difficulties in bringing together all that is necessary - hangar facility, workshops, monitoring, maintenance, quality control, etc. What I would also like to state here is that while the government seeks details of experience, manpower, equipment and so on from an individual wanting to establish even a construction company, however, in the name of liberalization, licenses are being handed to everyone opting to enter the aviation industry. Nowhere in the world does this kind of thing happen.

How is the situation about manpower?

In case of big airlines, they can develop their own manpower. But how can an airline operating with a single plane develop its manpower? All it can do is bring in manpower available in the market. This would not have been the case if focus had been centered on qualitative growth and license had been issued to a few big airlines. This would have enabled the airlines to develop their own manpower. So what small airlines in the present circumstances are left to do is attract manpower from other airlines by giving them a higher pay. This is really not a good sign since it will bring about instability.

What have been the basis of competition in this industry here?

There should be competition but of healthy nature. Otherwise, quality will suffer. But what has been happening here is that rather than charge customers for quality of the service, airlines are trying to increase their occupancy rate by way of price undercutting. This is in a way a compulsion, and I don’t want to blame anybody. Because once you are in the business, it is difficult to make a retreat as the barriers to exit are very high given the high investment.

How are you thinking about going for international flights?

I am one of the most senior professional pilots in the country. Therefore, I am interested to fly international routes. But from a business perspective, you will have to look at commercial viability. If it is economically viable, we might venture into the international arena. I am now waiting for invitation from HMG for applications to take up international routes.

How viable is it econo-mically to operate internatio-nal flights?

When five years ago HMG sought applica-tions from airlines aspiring to conduct international flights, a very unique incident took place. Six airlines were handed licenses to operate international flights on the same date. Such a thing has never happened even in a country as developed and resourceful as the United States. However, none of the airlines were in a position to operate since they could not get enough routes. Take for example the issue of jet utilization. Unless the utilization totals over 250 hours, it is not viable. RNAC leases aircraft on a 250-300 hour guarantee. In our case, the government issued license to six companies while providing flying routes totaling to only 50 hours a month. How far is that viable? Moreover, as per government rules and terms of reference, AOC had to be obtained within 6 months and operation had to be begun within a year. Now without being provided the routes, it is not possible to bring in aircraft. An airline, to operate international flights, would need an investment of Rs. 70 to 80 crores. The terms of reference of the government also were done without proper homework because every airline was told to fly to Europe. It is not necessary for every international airline to connect to Europe. It is up to the operator to choose the sector he wants to fly to. The airlines were also required to bring in wide-bodied aircraft, which is bigger than the 757 aircraft and seats 160-165 people. Every airline also had to have one jetplane. I say that the policy lacked homework because with only one aircraft, it is impossible to operate international flights. You need two aircraft in the least. On top of that, the private airlines were not permitted to fly on the routes that RNAC was flying. The policy was thus framed to protect RNAC. It is okay to protect the national flag carrier but not at the cost of the country’s business sector.

"Happy at satisfactory growth"

Bikas Rana
Chairman, Fishtail Air

Since the inception of the company two and a half years ago, our company has been doing very well. The business has picked up rapidly and the trend of growth and profitability seems to be satisfactory and upto our expectations.

Airlines are accused of forming a cartel and revising tariff together. What is your comment?

Since 1993, the tariffs of small helicopters have increased only once. This was done on October 18, 1999 as it had remained constant for the past six years. The price of spare parts, fuel, operational costs etc. had gone up considerably during the past six years. Further, there has also been an implementation of VAT on spares. All these factors had initiated the increase in the tariff for small helicopters. However, the revised tariff is very insignificant compared to impact of the inflation which has increased the cost of operation considerably.

How has been the growth in investment in your company?

Being a private limited company, we have a limited number of shareholders and the investments have been made as per the requirement of the company. We are presently operating two AS 350 B "Ecureuil", French-made helicopters, which have been financed by our local bank. We are contemplating to add one more aircraft of the same series (AS 350 series). If everything goes well, we would like to bring the aircraft within next six months.

How do you view the growth in the number of airlines in the country?

It is a healthy sign. However, the operators should maintain the standard of service and try to improve the quality of service.

What do you think of the existing policy and attitude of HMG regarding airline business?

It seems to be promising. We have noticed a significant change in the policies and attitude of the government, which is aimed at the betterment of the airline business.

Risks and Rewards

By Navin Singh Khadka

If holidays were round the year, perhaps there would have been no holidaymakers. And, it is this "time constraint" of the visitors, that has made air travel inevitable to them. It is not just the international travel. Even when they are here, most of the tourists with limited days to tour, certainly demand air services to travel across the Kingdom reaching different touristic spots.

While meeting the tourists’ demand, the domestic flights also help shape-up the local economy of different tourist-beckoning areas.

No doubt air travel saves time. But, that is not the only factor to sustain aviation’s role in tourism. What matters equally is safety. And, this is something that functions crucially in tourism’s growth.

Of the around 50 aircraft registered in the country — most of them operating in the domestic routes — if one Pilatus Porter (a very small aircraft) crashes down, the news hits international headlines. The issue becomes more serious if the victims in the crash happen to be tourists. While news like a bus tumbling down into a river killing all its local passengers does not even get proper treatment in the national media.

Incidents like these have a loud and clear message: Aviation in tourism has both risks and rewards. As number of air crashes rise, tourists will balk at using domestic air services to visit touristic spots in the remote areas — some accessible only by air.

Besides, even for sight-seeing, visitors do use air services to reach different tourist spots like Chitwan, Pokhara, Lumbini, among others. A total of 500,000 tourists arrived in the country last year marking above 30 percent increase in 1997 record.

Reflecting the growing use of domestic air-travel by tourists is the increasing number of mountain flights. Almost all the private operators doing business in the domestic routes have been flying mountain flights charging above 100 US Dollars to every tourists for an hour flight. Every morning, such flights take off from the Tribhuvan International Airport, taking tourists close to the Himalayan ranges in the north.

Around 20 companies are already operating in the domestic front at present while the number of private companies having the Aircraft Operating Certificates (AOCs) has reached around three dozen. "It has virtually become a fish market. We have been requesting the government to stop issuing license to operate in the domestic route," says a senior official at Civil Aviation Authority of Nepal (CAAN).

After the Ministry of Culture, Tourism and Civil Aviation issues the license to companies registered in the Ministry of Industries, CAAN issues AOC to them.

Together with the number of registered aircraft operators, what has also been going up is the number of fatal air-crashes. Consider the official figures: In the last three years, one-dozen air accidents have taken place claiming around 60 lives. In the last one-decade, two air crashes claimed maximum number of tourists’ lives. In July, 1997 an Airbus 310 of Thai Airways crashed in Ghyangphedi killing all its 113 passengers and crewmen. Hardly two months later, yet another Airbus 310 of Pakistan International Airways crashed at Bhattedanda claiming all the lives of 157 passengers and crew-members.

Incidents like these certainly are no good sign for tourism. No matter how adventurous the visitors are, air-safety does matter to them. And for the kind of topography the capital valley has, types of aircraft and the back-up ground facilities both are equally instrumental for safety in civil aviation.

"The government should give priority to the companies operating brand new aircraft," says Birendra Bahadur Basnet, Managing Director of Buddha Airways, one of the leading private companies operating in the domestic front.

Most of the private companies have been operating aging aircraft fueling doubts over air safety. Add to that the ground facilities far lagging behind the steadily increasing number of aircraft. One look at the cramped apron at the TIA explains the gravity of the situation. "The situation has so much worsened that the flaps of aircraft parked there may slid against each other anytime," says an aviation expert.

Many of the private operators park their aircraft at TIA notwithstanding the agreement with the authority that they would have to use other airports outside Kathmandu as their base.

The formation of Civil Aviation Authority of Nepal (CAAN) has been dubbed as a positive move for the country’s civil aviation. How much will the autonomous body be affective to gear up civil aviation in the country is the matter of time. And, that will be the testing time for the fate of the nation’s tourism industry.

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