November 21: The shares of the state-owned Nepal Airlines Corporation (NAC) has been continuously decreasing for the last two years. The market shares of Nepal Airlines, which had increased for seven years until 2020, has continuously dropped in 2021 and 2022.
The annual report of FY 2079/80 published by the NAC mentions that the market shares of Nepal Airlines reached 25 percent in 2020, decreased to 20 percent in 2021 and 16.56 percent in 2022.
The flag carrier of Nepal, which has been providing flight services both domestically and internationally, is losing its market shares due to its inability to properly manage the aircraft it has and create a suitable strategy. The market shares of some private sector air service provider companies which started operating later than the NAC has reached more than 55 percent. The market shares of rest of the airline companies are also increasing.
The quality of service provided by the NAC is poor compared to others. There are complaints of delay in flights while the NAC takes months to repair the engine, and faces frequent technical problems.
It is mentioned in the report that the number of aircraft is inadequate and the service provided is not of good quality, so the market shares have dropped. Nepal Airlines, which once flew to 39 domestic destinations, now flies to a total of 19 destinations. The number of international destinations has also decreased to nine.
In 2020, the market shares of the NAC increased due to the non-operation of other aircraft due to Covid-19. Nepal Airlines, which has been serving for decades, has been losing its market shares due to its inability to implement the right strategy in both domestic and international flights and its failure to attract more customers.
Although reports have been prepared several times with recommendations regarding the structural reforms of the NAC, market expansion and strategy, the market shares and income have decreased instead of increasing.
The NAC, which frequently cancels flights, has mentioned in the report that the flights are delayed due to bad weather, technical problems as well as engineering and other reasons. The NAC currently has two Twin Otter aircraft which it uses to operate domestic flights.
The flag-carrier of Nepal has been flying to nine destinations in seven countries with four Airbus.
In order to compete with the private sector airline companies, the NAC some years ago purchased six Chinese aircraft for domestic flights under grant and loan assistance. At present, those aircraft are grounded and cannot be sold either. According to the report published by the NAC, the average usage of its aircraft is 13.6 hours per day.
In the year 2022, Nepal Airlines served 629,147 passengers during 3,768 international flights to various destinations. Nepal Airlines has earned the most revenue from flights to Bangkok (Thailand), New Delhi (India), Kuala Lumpur (Malaysia), Doha (Qatar), Dubai (the United Arab Emirates), Hong Kong (China), and Mumbai (India).
In 2022, the company earned 98 percent of its income from the Bangkok flights while providing cargo services. In the Bangkok sector, 39 percent of the revenue is generated from passengers. Dubai is the lowest earning sector. By providing flight services in this sector, Nepal Airlines earned 12 percent income from both passengers and cargo in 2022.
In the domestic flight segment, the service of Nepal Airlines is very poor. Last year, the corporation served a total of 17,214 domestic passengers. The number of people taking the air service is low because there are fewer aircraft and the existing aircraft cannot be operated in an orderly manner. Minister for Culture, Tourism and Civil Aviation, Sudan Kirati, has announced government’s plan to purchase 10 aircraft for domestic flights.