National 7 (Spotlight Weekly)

Cutthroat Competition

Nepal's private airlines make efforts to lure passengers through reducing fares in the New Delhi sector

By A CORRESPONDENT

"By one and get one free," this is what the first commercial advertisement of Cosmic Airlines - Nepal's first private airlines competing in New Delhi sector with other airlines including three government-owned carriers and two India's largest private sector airlines.

With two old Fokker 100 jet aircraft, Cosmic Airline is competing in New Delhi sector with other airlines. Two private Indian airlines Sahara and Jet Airways are flying 'wide body' latest Boeing 737 aircraft. Indian Airlines and Royal Nepal Airlines Corporation also have wide body aircraft and Druk Air, Bhutanese Airlines, has new airbus.

At a time when all other airlines fly latest aircraft at reasonably good price and wide internal and international connection, Cosmic Air's fair reduction will benefit only a few.

As the tourist arrival from India declined in the year 2004, Cosmic Air -Nepal's first private airline - to introduce the jet engine in domestic and international sector - seems to have difficult time ahead. In terms of economy, there is no justification for a small airlines of a small country with well-organized and systematized airlines of big country like India.

"There is no economic rationale and justification for such competition. When the country's private banks and other financial institutions are yet to recover from bad loan given to private airlines, no one is in position to finance the airlines," said an aviation expert. "It is sheer mystery to see cosmic flying to New Delhi."

The recent annual report on tourist arrival released by the Nepal Tourism Board pointed out continued decline of overall tourist arrival in the last three months including Indian tourists. Although Indian tourist arrival in December increased by seven percent compared to the same period of previous year, it is not enough to make all Airlines profitable.

Despite sound financial position and relatively good tourist arrival from India then, Necon Air collapsed a few years ago, under a huge cost of flying to Indian cities including Benaras and Patna. How Cosmic Air – which has two F100 aircraft – will survive in a fierce competition remains to be seen.

Cosmic Air is now flying to three domestic airports Biratnagar, Nepalgunj and Bhairawa. It flies to Dhaka and New Delhi in international sector. Since Nepal's all three domestic airports have just 5000 feet long runway and virtually no parking for such a big jet, some aviation experts have already started raising questions.

According to air agreement between Nepal and India, 6000 seats are available for a week. Thanks to the limited number of airlines, this agreement was not utilized fully for several years. 312,000 air seats are available in Kathmandu-Delhi sector annually. There are total of 624,000 seats available annually for Kathmnadu-Delhi and Delhi-Kathmandu.

The year 2004 would have ended up very positively in terms of tourist arrival had the incident of September 1 not occurred. Apart from September riots, the incessant bandh, strikes and shutdowns affected the country's tourism.

Amid this bleak scenario, Cosmic Air's efforts to compete in New Delhi sector with renowned and economically strong Indian private airlines is yet to prove any economic justification.

"Airlines business is not so simple as some would believes. It consists of money, manpower and technical expertise," said an aviation expert. "In the existing situation, I don't know how Nepal's newly emerging airline will survive in such a low flow. If it survives, it is going to be a miracle."