Axed in frustration
“It is old”, is often the logic we cling on to justify demand/longing for replacements. It is exactly how Nepal Airlines’ (RA) B757s get portrayed, as one (9N-ACB) is still flying and filling schedule voids as required, while the other (9N-ACA) has been immobile over two years. There is no denying that they had gotten unreliable over time. It might still have been workable in less sensitive role with P2F (passenger to freighter) conversion. Pilots who had long flown these feel sorry to see them disposed. Interestingly, 9N-ACA was the only “combi” version (with wider door to facilitate loading freight) ever built. It was eventually sold to a person with highly ambitious plan for a ‘BB Airways’ flying the regional circuit. (We do not know if BB stands for the initials of the person who bought it.) Now that BBA is seeking permission to scarp the plane instead of flying it, the question is: was it about the ignorance about the intricacies of starting an airline or was it something more? It seems to be both.In reality and as an expert pointed out, the aircraft cannot even be ferried, let alone carry passenger because of expiry of limited-life parts (LLP) components. The LLP primarily includes assessing a) if engine configuration is as per specifications b) reviewing its exhaustive part records and c) an accident and incident statement search. It is more important especially when an aircraft is sold or grounded for long. The buyer naturally needs to be assured about its actual status; the B757 certainly came without a valid airworthiness certificate (AWC) at the time of the sale.
The issue seems to have gotten highly entangled, given the Gordian complexities of our bureaucratic process. The aircraft, as I understand, is yet to be deregistered and is still technically owned by RA, and not BBA. Moreover, ownership cannot be transferred to BBA as it does not have an Airline Operation Certificate (AOC)!
This is not the first time we have heard of BBA; it had leased an aircraft from a Cambodian charter carrier TonleSap few years earlier, and had secured an AOC as any commercial airline is required to do. The AOC has since expired as it stopped flying and BBA has reapplied for the same. First of all, it takes over a year to get the AOC if the process is smooth. But the prospect of the 9N-ACA flying again is looking increasingly remote as the owner will have to pump in about $19m more just to make it airborne. And that was perhaps not anticipated while buying it.
Scrapping an aircraft is a specialty job and a big business, providing replaceable spares to airlines world over. Elsewhere, aircraft intended for decommissioning are flown to specific airports where they are carefully taken apart. Engines are the most valuable items followed by landing gear assemblies. There are various other electronic items that are delicate but still sellable. The most easily disposable items are the seats while the sheet metal fuselage is bulky but less expensive. The first ever jet scrapping instance at TIA relates to a Thai/DC8 that veered off the runway in 1973. But it was a total write off as an engine was torn off on landing.
First of all, the Civil Aviation Authority of Nepal is obligated to work in tandem with RA or any other Nepal-registered airline to simplify bureaucratic processes where possible. But they are somehow not doing this. This is not to suggest that relaxing aviation safety should be part of this process. With the advantage of hindsight, it would have been better for RA to have ferried the B757 out to appropriate international venues before it was taken out of service. It might have attracted interest of more prospective buyers there rather than putting it up for sale at a way-off location. But in this case BBA cannot blame anyone but itself for being blindly eager to run an airline and now having to axe it of frustration.
Ideally, entrepreneurs need to be nourished rather than be overwhelmed by all obstacles. Had BBA succeeded, it would have created more Nepali jobs and helped a Nepali learn the ropes of running an airline. By attempting high risk ventures BBA tried to chew a bigger mouthful than would have been considered wise.
We cannot produce entrepreneurs but we can create an environment to help them grow. All in the aviation fraternity should work together for the betterment of this sector. RA may get a better price and BBA may succeed in securing the other B757 even while competing at a location other than Kathmandu. But that will happen only if RA first opts to put the other one for sale as well disregarding other plausible options o
On its own wings
A flag-carrier is generally taken as a means of transport that is an iconic representation of a country. The term is perhaps more applicable in shipping, whereby ships actually fly the flag, even though most merchant ships get registered in Panama as a matter of convenience. The hassle-free registration there helps them avoid strict regulations as well as income tax and to hire cheap foreign labor. In airlines, the rules are more stringent. But just being registered does not guarantee an airline the coveted status. Himalaya Airlines is not Nepal’s flag-carrier even if it is registered here. But flag-carriers are generally treated like pampered child, with the state forced to meet their just and unjust demands alike.
Need for constant backup financing, at the expense of taxpayers, is the usual mode by which they survive even when in red. But even then many countries continue to protect and support failing flag-carriers. Our flag carrier, known in short as the RA, is no different. It carries an additional uncertainty tag with its tiny fleet that, at times, fails to keep the date.
There was recently an immense interest in the Indian government’s efforts (GoI) to privatize Air India (AI), a behemoth public sector undertaking. It would not be a complete disinvestment as the GoI would still hold 24 percent shares and also seats on its board. But the disinvestment could not happen and many saw it as an aborted take-off. In reality, the situation was more akin to an aircraft left stranded on a parking bay.
Neither domestic nor foreign carriers showed any interest in taking the “debt laden” undertaking (in spite of some debt reduction). Indigo and Jet Airways had shown some interest initially but they were not comfortable with various conditions that were attached.
The submission deadline for potential buyers came and went and with the general election next year the BJP government thought it unwise to push it any further. The disinvestment would have been impossible, as it is, given the short timeframe.
AI has a total of InRs 44.19 thousand-crore of loan, of which Rs 25.8 thousand-crore is for existing and future fleet, while 13.6 thousand-crore is non-convertible debentures (NCDs). It is believed that the inability to make profit had hindered collection of debenture redemption at IA, while serious cash flow situation delayed even salaries.
As for RA’s financial health, its cumulative loss stands at Rs 0.100865 thousand-crore. The government has invested 0.294 thousand-crore in it while its mid/short term loan stands at 1.096 thousand-crore (as per the 2017 Auditor General’s report). As we see, beyond their common flag-carrier status, AI and RA are not comparable. The above data clearly shows the contrast in the sheer scale of AI and RA, even though the two suffer from basically the same kind of malaise.
RA is reported to have made a profit of Rs 16.1m. (It is deliberately not expressed in thousand crore, to make it look less dismal.) RA has been unable to optimize the use of its Airbus A320s. The new A330s it is acquiring will also face similar problems, with the European skies still forbidden for Nepali carriers. The prospects of A330s flying to destinations outside Europe are also rumored to be dim.
In general, airlines do not make money as a major portion of their earnings is spent on fuel, staff and essential hardware. The debt arises due to the exorbitant cost of aircraft and years of unprofitable service. Low cost and private carriers have been encroaching on flag-carrier’s traditional domain. If a route is good, someone will fill the gap with cheaper offerings and most travelers end up better off as a result.
It was necessary to prop up flag-carriers when the airline industry was just in its infancy. But why should they continue to operate in places where non-flag carriers are now willing to fly cheaply? Flag-carriers are also useful in serving remote regions of a country like ours, but there is no point in maintaining it beyond that. As we all know, there are other murky reasons behind RA’s link to national pride. Call it anything you like, we just want an airline that can fly on its own wings.
The author writes on aviation
