NATIONAL 2 -[GOVERNMENT EMPLOYEE (Spotlight Weekly)]

Adding Into Its Fleet

The national flag carrier decides to lease purchase a brand new Boeing 767 300 ER for long route services

-BY A CORRESPONDENT

Dogged by unending controversies triggered by its series of short term aircraft leasing all over the years, RNAC finally has something to boast about. It has declared that it would lease purchase a Boeing 767 300 ER directly from the supplier Boeing Company based in Washington D.C.

"The decision is basically meant to bring the practice of short term aircraft wetleasing to an end," said Bharat Bahadur Karki, Executive Chairman of RNAC. "Around 50 million US Dollars was spent on short term lease in the last five years."

It wasn't just that. Big amount was involved in kickbacks as different managers at different coalition government periods dealt with various agents and brokers to acquire aircrafts on wet-lease. Lured by the hefty commission involved, political parties resorted to pressure tactics for aircraft leasing -- often benefitting the suppliers and brokers at the cost of the national flag carrier.

Going by the history of aircraft leasing in RNAC, most of the deals have been decided at the eleventh hour -- taking undue advantage of the time constraint. The worst case of wet-leasing took place in November last year when the said aircraft never arrived in the capital even as RNAC had already paid the supplier Chase Air based in the USA.

The national flag carrier had paid 783,000 US Dollars for the wet lease of Boeing 757 the company had agreed to send to Kathmandu. But the aircraft never turned up and RNAC was hit by yet another scandal what is infamously known as Chase Air scam.

Even after having leased aircraft more than half a dozen times, the national flag carrier does not have any clear cut rule for air-craft leasing. The RNAC Act 1972 is silent over the issue. Taking undue advantage of the situation all the political parties that have come to power in the last half a decade took RNAC for a ride.

The latest decision to lease purchase a new airplane comes at a time when the national flag carrier badly needs to increase its jet-fleet to press in its international routes. With two of its own Boeing 757s and a wet leased aircraft, the national airline has been flying to eight countries and 12 destinations.

But with the type of aircraft it has with it now, RNAC has been operating at losses, especially in long routes like Europe. According to D.M.S. Rajbhandari, RNAC's Corporate Director, the long ranged aircraft like 767 has less operating cost per seat. "That is the reason why you have less break even point for such aircraft where as the medium range aircraft like Boeing 757 operates at loss even if it has 100 per cent occupancy in the long route."

Even as it has two engined aircraft like that of Boeing 757, Boeing 767 has less operating cost due to its capacity of carrying more passengers, cargoes and fuel. "It is all because of the less load penalty," explains Captain Shree Ram Sharma, a senior pilot with RNAC. And that means in simple language, the aircraft burns less fuel compared to Boeing 757.

Experts also hail the idea of getting the aircraft directly from the manufacturer. "It makes a big difference when you are getting the product from the manufacturer than buying the same from the streets," they say. "The manufacturers also supply spare parts and other packages like maintenance."

All sounds fine. But a million dollar question is yet to be answered: What will be the price of the aircraft? RNAC official say the price is subject to negotiation with the supplier. "Since the aircraft will have to be ordered with many additional accessories, we cannot declare the price now," Karki said.

RNAC officials also say that the price quoted now can rise further as it may take one year or more to fly the plane in.

Rajbnahndari, however, said that the listed haul price of the aircraft could be around 80 million US Dollars and each engine could cost six million US Dollars.

Even if RNAC officials are tight-lipped on the price issue, Boeing Company's website in the internet has a clear-cut price list available. According to its 1999 Airline Prices list, the 767 300 ER model aircraft costs between 105 million US Dollars and 117 million US Dollars.

"The difference between the high and low prices is a function of the configuration and special features options included in the airplane," reads the website of the company. "Many options are available that significantly affect the price of the airplane: capability, interiors, avionics, fuel and so forth."

With the price factor at RNAC still elusive, it is also unclear how the national flag carrier will generate funds to pay the lease amount of the aircraft. Since the installments of one of the two leased Boeing 757s bought in 1987 was over last September and that of the other will be paid by September next year, RNAC officials claim they will have some cash in hand to make payments to the Boeing 767.

The two lease purchased Boeing 757s were priced 45 million and 55 million US Dollars when RNAC flew them in more than one decade ago. Their installments were fixed at 3.6 million US Dollars, including interest, to be paid every three months.