NATIONAL7Spotlight Weekly)]

Flying Low

After inducting the Lauda Air jet into its fleet, RNAC records huge losses

By A CORRESPONDENT

Will the Royal Nepal Airlines Corporation's Lauda Air Boeing 767 aircraft ultimately ruin the airlines? 'No,' say many aviation experts. They argue that the RNAC's fourth aircraft will benefit the country if it is operated with proper planning.

If that is the case, why haven't steps been taken to prepare a long-term plan to use the aircraft in the international sector?

The RNAC's employee associations and other staff argue that the leased Lauda jetliner is still going to be a white elephant for the carrier even if it is fully utilized. According to them, the airline has already lost the equivalent of Rs. 87.5 million in one month because of under-utilization of the aircraft.

RNAC : In the eye of the storm

If an airline that has been trying to expand its international operations fails to utilize available flying hours, one surely cannot blame the aircraft. "It is the responsibility of the management to prepare a plan to minimize losses from the aircraft," said a former executive chairman of the RNAC on condition of anonymity.

"As all forces have been working to destroy the national flag carrier, this tug-of-war will not end until the organization finally collapses."

At a time when dark clouds are hovering over the tourism industry, the Lauda aircraft may add to the financial losses of the airline.

According to agreement, the aircraft has to fly a minimum of 300 hours a month, but the RNAC could not utilize even 74.10 flight hours. The airline has to pay Lauda Air at least US$ 1,005,000 per month at the rate of $3,350 per flight hour.

"How can you make profit from an aircraft that has such high hidden costs? It is in the interest of RNAC to cancel the deal," said Salikram Acharya, president of the RNAC Employees Association.

Few airlines in the world are running losses because of under-utilization of their aircraft.

RNAC may be the victim of poor timing, having introduced a fourth aircraft at a time when the tourism sector is facing one of the most severe crises in its five-decade history.

As the Lauda Air jet was commissioned during the lean tourist season, some might argue that losses were inevitable.

But the problem also has its roots in the very high indirect and hidden costs associated with flying the Lauda jet.

The occupancy rate of RNAC's aircraft is about 70 percent, which is considered excellent in the aviation industry. But if tourist arrivals continue to decline, thinning flight occupancy, the flying cost of the aircraft cannot go down.

Optimists see signs of hope. If the Lauda Boeing 767 flies on new routes with capacity passengers, those losses could be checked and perhaps even reversed.

It would also be instructive to know whether it is only RNAC that is running losses or whether the other international airlines are also facing similar problems.

After the hotel strike last November, the number of tourists visiting the country has drastically declined. Because of the continued deadlock between hoteliers and hotel employees, many tourists are said to have crossed out Nepal from their list of possible destinations.

As long as the deadlock between two sides continues, the possibility of further losses can only grow. The hope in the tourism industry is that Lauda aircraft doesn't put them too deep in the red.

Nepal Law Society
New Leadership

At a time when the activities of the Nepal Law Society -- the country's pioneer body of professional lawyers -- are in dealine, it has chosen a new leadership for the next four years.

"We will increase our activities in accordance with our objectives," said newly elected president and advocate Anup Raj Sharma.

The NLS general assembly also elected Indira Rana, Anil Kumar Sinha, Puspa Gautam Bhusal and Sajan Ram Bhandari as vice-president, secretary, joint secretary and treasurer respectively.

The body also elected senior advocate Madhu Prasad Sharma, advocates Madhu Prakash Ghimire, Sudhir Shrestha, Purna Man Shakya, Sambhu Thapa and Kashi Raj Dahal as members.

Outgoing president and senior advocate Chudamaniraj Singh Malla highlighted the role of the NLS in the process of strengthening rule of law and human rights in the country.