Editorial | Privatize Nepal Airlines

Consider the paradox: A constitutionally ‘socialism-oriented’ country continues to pour billions of rupees of taxpayer money, not into vital health and education sectors, but a perennially loss-making airline. In the pinch of the Covid-19 pandemic, the national flag carrier lost Rs 5 billion in the last fiscal year. Its total debt comes to Rs 47 billion. Yet the unions of the various political parties insist that the way forward is to continue with business as usual. They are now protesting against the organization’s planned part-privatization, as ‘privatization has never worked in Nepal’.

This is a specious argument, given the wretched history of the airline. Even before the pandemic, it was struggling to balance its books after the entry of better-managed private carriers. This was not just the case in the domestic sector but, increasingly, also internationally, as even here the entry of Himalaya Airlines challenged its monopoly on lucrative international routes such as Dubai and Kuala Lumpur. The purchase of four Airbus jets and the grounding of turboprops procured from China, both on pandemic-eve, only added to its burdens.

There can be no reason to continue with the failed formula applied to the NAC over the years. This entailed appointing political cronies, using them to channel airline procurement and leasing funds into the coffers of ruling parties and giving lucrative bonuses to politically inclined employees, even as the organization’s collective debt continued to mount. Other potentially workable plans such as handing over airline management to a foreign company were shelved too. If the NAC were to be run like a well-oiled private enterprise, more than a handful of greedy middlemen stand to lose their access to easy money.

Reform efforts have been initiated at various times by various governments, from across the political spectrum. But then the bureaucrats and union bosses of the same political parties have stymied such efforts each time. Either Nepal Airlines has to be permanently grounded or, more desirably, obstacles for its part-privatization must be cleared. There can’t be two ways about it. We cannot have a purely business-minded national carrier, as private airlines tend to shun difficult and less-profitable routes. But we can’t afford to lug along this white elephant any longer either.