National 10 (Spotlight Weekly)

Troubling Times

Necon Air has resumed fights to the Indian city of Patna and Varanasi but the future of private carriers remains uncertain

By A CORRESSPONDENT

After a disruption of nearly a year, Necon Air, the country's first private carrier to operate on the international sector, has resumed flights to the northern Indian city of Patna. But will it prove to be sustainable? Fellow carriers and the wider tourism industry are eagerly waiting to find out.

Three years ago, Necon Air started Biratnagar-Calcutta, Kathmandu-Patna and Kathmandu-Varanasi flights, taking advantage of the government's liberalized aviation policy. However, it suspended the Biratnagar-Calcutta service within a few months. The other two flights, too, were subsequently discontinued.

Private Airlines : Struggling for survival

After the hijacking of Indian Airlines Flight 814 in December 1999, and the carrier's suspension of its flights to Kathmandu, tourist arrivals from India have plummeted. This has hit Nepal's aviation industry very hard. Following the September 11 terrorist attacks in New York City and Washington DC, Nepal's private airlines saw additional negative consequences. Whatever the circumstances and consequences, the resumption of Patna flights by Necon Air may inject some hope among private airlines in the short term.

But the long-term outlook remains gloomy. "As long as this situation continues, one cannot see the possibility of an increase in the number of air passengers even after the resumption of flights," said a tourism entrepreneur. "The airline may be once again compelled to discontinue the service."

The situation in the domestic sector is hardly encouraging, either. The number of tourists on traditionally profitable routes like Pokhara and Lukla has hit a record low. Since the terrorist attacks in the United States in September last year, there has been a global slump in tourism. This has battered Nepal's aviation industry, which was already badly shaken by and endless spree of domestic violence and instability.

In many western countries, a number of big airlines declared bankruptcy and others have received government protection. Nepalese entrepreneurs stress the need for similar incentives. "We also need a rescue package from the government," said the managing director of a private airline. "Financially, we have been in a very difficult position for the last one year. But nobody seems to be worried about the fate of the tourism industry."

With the imposition of the state of emergency last November, the number of domestic passengers has increased. According to private airline operators, this has allowed them to meet minimum operation costs. Among domestic air operators, Necon Air, Shangri-La Air, Yeti Airlines, Cosmic Air, Mountain Air and Skyline have been facing much trouble.

With the decline in the number of foreign passengers, the private carriers have been struggling for survival. The increase in the airport charges has exacerbated the situation. In the last year, the costs of aviation fuel and airport taxes have increased by several folds.

As part of their cost-reduction plan, many airlines have sent employees on compulsory leave. Many carriers are operating with minimal employees. Until a few years ago, the airlines industry was witnessing a boom in the midst of the much-heralded open-skies policy of the government.

At a time when the situation is getting bad from worse, Necon Air has shown courage by resuming its flights to India. How the government steps forward to rescue private airlines remains to be seen.