NATIONAL 3 -(Spotlight Weekly)

Partnership Pursuit

To survive amid stiff competition, a new airline agrees to join hands with an old one

By A CORRESPONDENT

As competition among the major private airlines grows stiffer by the day,there is a clear contest for survival. Although efforts have been made bydifferent airlines to coordinate their operations, none has entered any sort of alliance. Realizing the importance of partnership to survive, Shangri-La Air, a relative newcomer, and Necon Air, Nepal’s oldest private airline, are coming close to a merger in the coming season.

In the first phase, Shangri-La Air, Karnali Air and Necon Air have agreed on an Interline Agreement. The agreement, many believe, will rescue these airlines financially. Following the drastic plunge in tourist arrivals in recent times, most Nepalese private airlines are facing a crisis of survival. Efforts toward building an alliance would affect the domestic operations of state-run Royal Nepal Airlines.

The partnership initiative was taken a few days after Narayan Singh Pun, a member of parliament from the ruling Nepali Congress, took over as chairman and managing director of Necon Air, which is said to be in serious financial trouble. If these three airlines unite, they will have two ATR-40, three Beech aircraft, two Twin Otters and some helicopters. "As there are many problems, including rising fuel prices and other financial burdens, merger is only way to survive in the business," says Pun.

After the alliance, the airlines would be able to slash expenditure on such areas as transportation and employees. "The merger will not have any major impact in the air business, as there are still many carriers which prefer to go alone," says a civil aviation expert. Although the three airlines are said to have agreed in principle to enter some sort of alliance, they are yet to take a final decision.

"We have not formally taken any decision on a merger. We want to assess the situation before taking a decision," Tshering Lama, director of Shangri-La Air, told Deshantar weekly. The airline owns two Twin Otters and has leased three Beech aircraft.

There are more than a dozen private airlines operating in Nepal. Each year some old airline goes bankrupt and a new one steps in. At the beginning of this year, Flight Care Service, a private airline, suspended its operations.

In 1992, when the government introduced an open-sky policy, it allowed three private airlines to run services. Two of them — Nepal Airways and Everest Air — have since folded, leaving Necon Air as the sole representative of the private-sector pioneers. Many other airlines are facing an uncertain future, as the government continues to promote private airlines without proper evaluation.

After the unification of these three airlines, other carriers are said to be considering similar proposals. Apart from RNAC, Karnali Air, Shangri-La Air and Necon Air, Buddha Air, Mountain Air, Skyline, Cosmic Air, Gorkha Airlines, Asian Airlines and Dynasty are serving the domestic sector.