Flying Low

Nepal's aviation industry is reeling from the fallout of the Maoist insurgency

By AKSHAY SHARMA

After the latest escalation in violence in Achham and Salyan districts, the aviation insurance premium of domestic airlines is expected to surge, according to entrepreneurs and experts.

Narayan Singh Pun, managing director of Necon Air, says the aviation insurance premium is going to rise by up to three times. Currently, Necon Air is paying 60 million as premium, but that amount may rise up to 180 million soon. "Necon Air has received a letter from its insurance company saying that the company must accept the hike within a week," Pun added.

The aviation policy of the government has not proved to be an effective cushion. Moreover, low airfare is a key hurdle. A hike of 20 to 30 percent in the airfare would be required, given the current deteriorating phase of the industry.

Shivendra Bahadur Basnet, managing director of Mountain Air, says the aviation insurance premium is likely to increase but his company has not received such information. He added that Mountain Air was paying an insurance premium of two million and had a one-year contract with the insurance company. "The hike will take effect only after this contract is over," Basnet said.

Birendra Bahadur Basnet, managing director of Buddha Air, said the insurance premium has gone up by 50 to 60 percent. "The cost has increased. Due to the recent terrorist attacks, the tourism industry is on the verge of collapse." Competition is lowering the already depressed airfare but aviation premium is being increased, he added.

Bijay Shrestha, general manager of Yeti Airlines, said the aviation insurance premium would definitely go up, but the insurance company had not informed them yet. "The hike of the aviation insurance premium would indeed have an adverse affect in the aviation industry," he added.

When you have to collecting higher fares from fewer fliers, it is not difficult to fathom the depth of the crisis the aviation industry is facing.