By Pinaki Roy
The flow of international passengers in the first quarter of 2012 has been impressive enough to raise optimism among the concerned stakeholders. The statistics between January and March 2012 is an indication that international air service and passenger movement to and from Nepal is set to register a significant increase this year compared to 2011. A total of 717,182 international passengers (see table) availed air services via Tribhuvan International Airport (TIA) – the only international airport of Nepal – in the first three months of 2012, says Raj Bahadur Maharjan, Director at TIA’s Flight Approval Department.
There has been an increase of 84,459 passengers when compared to the first quarter of 2011, thereby registering a growth of 13.35 per cent over the same period of the previous year. Monetarily speaking, the total annual international flight service business in Nepal is worth an estiamted Rs 80 billion.
Ratish Chandra Lal Suman, General Manager at TIA, says, “The number of passengers has increased in the first quarter of this year also because of new airlines coming into operation and providing added air services.” He attributes the increment both to the increase in inbound tourists and the outbound migrant workers to different countries. Even though GMG Airlines towards the end of 2011 and Kingfisher Airlines in February 2012 ceased to operate in Nepal, their absence was promptly compensated by Indigo (October 2011) and RAK Airways (February 2012).
The number of flights that served these passengers was 5,693 (up by 9.69 per cent from 5,190 flights during the same period last year). While 2,846 flights made outbound journeys, the number of flights that landed at the TIA stood at 2,847. A total of 368,934 passengers flew out of Nepal while another 348,248 landed in the country from January to March this year, a growth of 11.48 per cent and 15.40 per cent respectively when compared to the same period of 2011. In the first quarter of the previous year, 330,954 passengers took outbound flights while another 301,769 passengers entered Nepal via inbound flights making a total of 632,723 passengers who availed international air services from January to March 2011.
This growth is certainly encouraging coming at a time when the International Air Transport Association (IATA) left this year’s global airline profit forecast unchanged at $3 billion, or 0.5 per cent of industry revenues. At a summit of airline chiefs being held this year in Beijing, this stable outlook masks a widening gap between regions with “only North and South America set to improve and the rest of the world seeing reduced profitability.”
The Year Gone By
International air passengers flying via the Nepali sky crossed 2.7 million for the first time in 2011. These passengers travelled via Nepal with 28 international airlines operating in Nepal last year, according to Maharjan. He said that additional airlines such as IndiGo, added frequency of flights and passenger occupancy increased the number of air passengers using the Nepali route. The year 2011 saw 2.7 million international passengers flying out and landing in the country on board 22,791 flights. A total of 28 airlines flew 2,700,027 passengers (see table) for the year, says Maharjan. This was an increase of 10.81 per cent in comparison to 2010 when 2,436,558 passengers availed international air services in Nepal.
While 1,407,512 passengers flew out of the country, the passengers entering the country numbered 1,292,515. A total of 11,393 flights departed while 11,398 flights entered Nepal during the period making a total of 22,791 flights for the year. The only new airline that started operations in 2011 was Indigo. Qatar Airways carried the most number of passengers – 277,796 on 2,374 flights while Jet Airways was second with 272,560 passengers on 2,191 flights. Nepal Airlines Corporation was third with 202,041 passengers on 1,619 flights.
Migrant Worker: The Main Market
With more Nepalis departing for jobs abroad and increase in tourist movement, international airlines operating in Nepal have witnessed this rise in passenger movement in recent times. The airline companies claim that they are equally focusing on all the segments, which include business travellers, tourist, VFR (visiting-friends and relatives) and workers. However, it’s no secret that migrant workers comprise around 80 percent of the total passengers availing international air services in Nepal. Most of the international airlines flying to and from Nepal are more focused on manpower markets rather than the tourism markets. Of the total international flights, the airliners carry only 20 per cent tourists, observe industry analysts.
Contribution to Tourism
International carriers from India accounted for the largest share of inbound tourism in Nepal in the previous year. According to TIA, Indian carriers flew around 48 per cent of all tourists visiting Nepal in 2011 – dubbed as Nepal Tourism Year (NTY). Indian travellers alone grew by 39 percent to 145,338 in 2011, a 26.67 percent share in total tourist arrivals to Nepal. As per TIA statistics, five Indian airlines—Spice Jet, Jet Airways, Air India, Jet Lite and Kingfisher—figured among the top 10 carriers bringing tourists to Nepal. The total tourist arrivals via air numbered 544,985 in 2011 that entered Nepal on board 28 international airlines.
Indian budget airline Spice Jet – that started flying to Nepal in October 2010 – was the largest carrier of tourists into Nepal in 2011, accounting for 15.28 percent of the arrivals. Jet Airways and Air India were the second and third largest tourist carriers respectively accounting for 12 percent and 8 percent tourist arrivals. Two legacy carriers—Thai Airways and Qatar Airways—fell in the inbound tourism rankings in 2011. While Thai’s market share shrunk to 8 percent from 11 percent in the previous year, the share of Qatar Airways slipped to 7 percent. Etihad Airways and Gulf Air, two more carriers from the Middle East, lost their slots in the top 10 list in 2011.
The healthy growth of Indian tourists to Nepal attracted yet another Indian private airliner Indigo Airlines that started New Delhi-Kathmandu flights in October last year making it the sixth Indian private airliner flying between Nepal and India. Currently, Air India, Jet Airways, Jet Lite, Spice Jet and Indigo fly around 130 flights a week between Kathmandu and various Indian destinations while Kingfisher Airlines has stopped flying to Nepal for the last few months. Needless to say, the increase in the number of Indian airliners flying to Kathmandu has encouraged the aviation sector in Nepal immensely and boosted the country’s tourism prospects. A total of 207,961 tourists entered Nepal via air in the first four months of 2012, a growth of 23.1 per cent over the same period last year. A total of 168,958 tourists had entered Nepal from January to April in 2011.
Broadly, any business or industry can be categorised either as monopoly or market-oriented. Due to the inherent nature of international air transport industry, every country enjoys certain exclusive rights, which indirectly helps them monopolise some air routes. This right, if exercised, could be of tremendous benefit to a country like Nepal. “Direct flights between Nepal and other countries can play a key role in bringing increased number of tourists into our country,” an industry insider opines.
For instance, none of the 27 airlines flying into Nepal have the right to operate direct long distance flights between Nepal and lucrative destinations like Europe, Japan and Australia. They can operate only connecting flights whereas Nepal gets the sole privilege of operating direct international flights from the country. As foreign travellers have no choice of direct air connectivity, air travel costs become higher while coming to Nepal. Mihin Lanka, a Sri Lanka-based airline has expressed its interest to operate direct flights between Colombo and Kathmandu. This was conveyed to Prime Minister Baburam Bhattarai by Lankan President Mahinda Rajapaksa on the sidelines of the recently concluded environmental summit in Rio de Janeiro, Brazil. Air Service Agreement (ASA) between Nepal and Sri Lanka allows Sri Lanka-based airlines to operate up to 14 flights a week in the Colombo-Kathmandu-Colombo sector.
State of the National Carrier
The status of the national carrier – Nepal Airlines Corporation (NAC) – in terms of international flight operations is disappointing to say the least. Around 95 percent of the international aviation market in Nepal is in the hands of foreign air operators. “Our market share is worth less than Rs 4 billion out of the international flight service business of Rs 80 billion annually,” says NAC Spokesperson Saroj Kasaju. The market share of NAC shrank to an all-time low in 2011 in terms of tourist carriage. The national flag carrier held the 10th position with a mere 3.05 percent while it had a market share of 4.87 percent in 2010. The eroding market share of NAC, according to travel trade entrepreneurs, is due to its inability to expand its fleet while the fact remains that the prerequisite for business expansion in airline industry is acquisition of aircraft, especially for operation in the lucrative international sector. In 2001, NAC was a leading carrier accounting for 28 percent of inbound tourists.
With more international airlines entering the Nepali skies and NAC’s track record of flight delays, travel agencies say the national flag carrier has become the last choice among visitors. Currently, NAC operates its international flights with two ageing Boeing 757s, either one of which is usually offline due to technical glitches and periodic C-checks. The carrier now flies to only five international sectors – Dubai, Doha, Bangkok, Kuala Lumpur and Hong Kong – down from 21 destinations in 12 countries with four Boeings till 1993. The airline now plans to start flights to Damam in Saudi Arabia. It also plans to start flying to Kuala Lumpur seven-days-aweek besides launching direct flights to Doha, Qatar.
The corporation currently spends Rs 1.39 billion on repairs alone for the two planes – Boeing 757-9N ACA Karnali and ACB Gandaki – which it has in its ‘fleet’ right now, says Kasaju. “Out of the estimated income of Rs 4.52 billion from international flights in the current fiscal year, 23 per cent of the total amount has gone into the repairs of the two Boeings,” he adds. The cost of repairs has gone up considerably in the last five years due to the fast ageing of the two Boeings. This expense is several times more than what the private carriers spend on repairs and maintenance which is six to 10 per cent of their earnings from flights.
A strong and competitive national flag carrier can serve as a key vehicle of the country’s economic and tourism development. Kasaju says, “NAC has become a factory without machines due to lack of aircraft but hasn’t gone in loss yet.” He cautions though that the corporation can land in major financial trouble if aircraft is still not added to its fleet.
However, all is not lost as Kasaju reiterates that the corporation is still making profit thanks mainly to its ground handling business. The corporation provides such service to 23 foreign airlines that fly to Nepal. From a domestic perspective, the corporation is expected to get five units of 19-seater aircraft and three units of 56-seater aircraft from China on grants and concessional loan. The airline management is scared of an imminent demise of the company as its current basis of survival – ground handling business – is in jeopardy due to a move by the Civil Aviation Authority of Nepal (CAAN) to possibly involve the private sector and allow competition.
Ground Handling Services at TIA
CAAN is currently holding discussions with other government agencies and stakeholders to allow the private sector to operate ground handling services at the TIA. It informed that it may soon allow private firms to operate ground handling services during the night time. Currently, NAC that provides ground handling services to almost all international airlines currently earns Rs 2 billion a year of which 10 percent is paid to CAAN as royalty. CAAN says that many international airlines and customers have complained about NAC’s ground support service. The complaints are mainly two: thefts and tampering with passengers’ luggage and higher ground handling charges of NAC in comparison with other international airports in the region. It is hopeful that the introduction of a private firm will enhance quality and manage congestion at TIA. “The Civil Aviation Authority Act 1996 and National Civil Aviation Policy 2063 state that the ground handling service should be competitive. Besides, the agreement with the corporation also does not restrict CAAN from appointing a private firm to manage ground handling services,” says Suman. He adds, “Due to NAC’s monopoly, the ground handling charges in our country are the most expensive in this region.”
The addition of one more ground handling service provider is expected to bring in competition and end the monopoly thereby resulting in quality service at lower service charge, adds Suman. TIA currently has the capacity to serve 8.2 million passengers a year and can serve up to 1,350 international passengers on an hourly basis. “We have not been able to serve to our total potential due to organisational inefficiencies. The number of flights out of TIA is less than half the capacity that we can accommodate,” Suman says. Meanwhile, NAC officials deny the charges and claim that the incidents of baggage theft and breakdown are minimized to internationally acceptable level. They also allege that some of these complaints are actually due to the fault of CAAN and other government agencies involved in the business such as the immigration department. According to them, some problems are due to lack of adequate infrastructure such as insufficient apron space for parking the craft which are forced to wait in the taxiway for long periods. Besides, inadequate number of boarding gates cause delays in boarding and confuse passengers on the correct conveyer belts to deliver the luggage are frequently out of order while the luggage weighing machines are not repaired on time. Insufficient number of toilets and chairs in the passenger waiting area add to passenger woes further.
The NAC management says that it’s not only the ground handling services that are expensive in Kathmandu. It gives examples of the fuel price and the charges that CAAN levies on account of aircraft landing, parking and navigation. The charges for CUTE used for passenger check-in too are high in Nepal than elsewhere, argue NAC executives. They point that the ground handling services in many other countries such as Thailand, UAE, Qatar, Malaysia and Hong Kong are provided by their national flag carriers either on their own or through subsidiaries. In Thailand, even the flight catering service is provided by the party that is recommended by Thai Airways, they say.
Trans-Himalaya 2 Airspace
Considering the increased air traffic at the TIA, CAAN is planning to operate the international airport 24 hours a day. This is expected to help in managing the increasing air traffic. Besides, it is also seeking an alternative location nearby Kathmandu for shifting the domestic airport from TIA to address the congestion. Likewise, it is also going to extend the domestic terminal building and make a separate car parking area for arriving passengers.
Nepal plans to ask India for the development of Trans-Himalaya 2 airspace (Hong Kong-Kunming- Guwahati-Kathmandu) connecting Southeast Asia, the Middle East and Europe in view of the increasing air traffic demand in Nepal. The route is one of the most lucrative routes for Nepal and if opened, it will be the shortest way from China and the Far East to the Middle East and Europe. The air distance from Kathmandu to Hong Kong will also be reduced. Implementation of this airspace will allow international airlines to fly over Nepali airspace, which means savings in fuel and distance for carriers flying this route and revenue for Nepal. “The airspace was discussed during Prime Minister Baburam Bhattarai’s visit to Delhi,” says Suresh Acharya, Joint Secretary at the Ministry of Culture, Tourism and Civil Aviation (MoTCA). According to him, India is positive about opening the proposed route. He adds that separate discussions need to be held with the Chinese government with regard to permission from the Chinese side for the opening of Trans-Himalaya 2 airspace. The opening of this proposed air route will have hundreds of international airlines use Nepali airspace and help the country to develop as a hub. CAAN officials add that the proposed route would be the shortest and could establish Nepal as an international transit point and result in enhanced air revenue for the country. The second international airport that the government has planned to construct in Nijgadh of Bara would be the greatest beneficiary in the event this air route comes into operation. Similarly, for aircraft entering Nepal’s air space, CAAN proposes Biratnagar (in the eastern region), Bhairahawa (in the western region) and Nepalgunj (in the mid-western region) as the three crossborder airspaces. Currently, Nepal has three incoming air routes—Simara, Kakkarbhitta from Paro in Bhutan and the Nonim air route from China. The Kathmandu-Mahendranagar-Delhi (L626) is the outgoing air route for international flights. Nepal is seeking new airspaces to ease traffic congestion, enhance information transmission, traffic regulations, emergency recovery of aircraft during accidents and automatic message switching system in its aviation sector.
The proposed route is more direct, safer, economical and efficient for flights between Europe, the Middle East and East Asia. These routes will reduce the congestion of westbound traffic flows across the Bay of Bengal. Experts claim that access to this international air space would give Nepal a huge opportunity to develop as a hub like India, the Maldives, Pakistan and Sri Lanka in South Asia. Maximum coverage of Nepal’s air space on long distance international flights via this proposed route could bring great benefits to the country if brought into operation
The Way Forward
As per the estimates of the International Civil Aviation Organisation (ICAO), an investment of US$ 100 in the air transport industry produces benefits worth US$ 325 for the economy, and 100 additional jobs in the air transport sector results in 610 new jobs across the wider economy. It further suggests that the air transport component of civil aviation accounts for more than 4.5 percent of the global GDP. As for the numbers, three carriers – AirAsia X, Malaysia Airlines and BB Airways – start operations in 2012. AirAsia X has already started operations while Malaysia Airlines and BB Airways are planning to operate international flights from September this year. It’s courtesy the competition among airlines on Kathmandu-Kuala Lumpur route as these three carriers unveiled plans to operate on the sector. The growing movement of Nepali migrant workers to and from Malaysia is one of the reasons luring airlines to fly on this sector. Statistics released by the Department of Foreign Employment shows that an average of 350 Nepali workers left for the Malaysian capital on a daily basis in the last fiscal year. While Malaysia Airlines is the national carrier of Malaysia, AirAsia X is a Malaysia-based budget carrier. ASA between Nepal and Malaysia allows Malaysian carriers to operate up to 21 flights a week. On the other hand, BB Airways is an upcoming local carrier promoted by TBI Group of Non Resident Nepalis (NRNs) in Japan which has already unveiled plans to operate scheduled flights on seven international routes including Kuala Lumpur.
There is an unlimited potentiality of the development of tourism and civil aviation sectors in the country. A well-equipped fullfledged international airport – where long-haul flights from Europe and America could directly land and take off – is needed for the development of the aviation and tourism sectors. In this context, a proposed fullfledged airport at Nijgadh can be an international hub for air transit and contribute substantially to the overall economy of Nepal. Nepal Investment Board (NIB) has already taken the initiative on projects related to the upgradation of TIA, and construction of a new airport in Nijgadh. It is estimated that the TIA upgrade will cost Rs 52.80 billion while the construction of the new airport in Nijgadh will cost Rs 45 billion.
‘Gulf Air Provides Excellent Connectivity to a Large Number of Nepali Workers’
RENJI KURIAN THOMAS
Can you share the rate of increase in passengers flying to and from Nepal over the years?
There has been a steady growth of passengers over the years. As one of the major international airlines operating in Kathmandu, we have seen nearly a 20 per cent increase in the number of passengers in the first quarter of the year 2012. The latest report of Tribhuvan International Airport (TIA) also has our airlines figuring among the top four international airlines that have seen the strongest growth in passengers’ movement. Having started our operation in July 1998, we are now operating 12 flights between Bahrain and Kathmandu weekly.
How do you assess the quality of air service infrastructure in Nepal?
The quality of air service is very good as the airport takes care of landings and take-offs for as many as 27 international airlines. However, there is always a scope for improvement with the increase in tourism traffic in Nepal. The airport has been working to improve its facilities further as such.
How has been the demand on the number of flights over the years? How are you managing the supply to meet the demand?
The demand on this route is increasing steadily. By increasing our frequencies as well as operating large aircrafts periodically, we manage to accommodate more passengers. Gulf Air provides excellent connectivity to a large number of Nepali workers in the gulf region, particularly Saudi Arabia. We operate larger aircrafts as per the situation, especially when the demand is high.
What are your unique selling propositions? How aggressively are you marketing them?
We have got the biggest network in the gulf region and several USPs to our credit. One of them is our schedule with excellent connectivity, for example, our split schedule of flights between Bahrain and Kathmandu offers very good travel options as it allows travelers to choose their own flight timings. In addition, Gulf Air’s seamless connectivity to Europe and the Far East via the Bahrain hub is an ideal choice for European customers travelling to Nepal or the Far East. Moreover, we are currently operating one of the youngest fleet with an average age of 5.2 years. This A320 fleet which operates between Bahrain and Kathmandu, offers ergonomically designed seats for travelers with maximum comfort, full flatbed seats on Falcon Gold class and the latest in-flight entertainment.
Internationally, we are the first airline in the world to offer ‘Sky Hub’ that offers hi-speed broadband internet, mobile phone connectivity, live TV telecast, popular entertainment programs, sports channels and an array of movies, music and games. In addition to that, Gulf Air’s unique Sky Nanny and Sky Chef Services have received positive feedback from the customers. These services have helped us win the best ‘family friendly airline’ from US-based publications and the ‘best cabin crew’ award ranking from an IATA survey.
Airlines flying to Nepal are said to have very few business class seats. Is it true that airlines do not see prospects for business class market here?
The aircrafts that we fly to Kathmandu are the same as the ones that fly on our other routes. We use a combination of narrow and wide body aircraft for flights to Kathmandu, depending on the traffic. We agree that the potentiality of business class market is not high in Nepal when compared to other regions. However, we offer 16 Falcon Gold Business class seats on our A320 fleet which has a configuration of 136 seats in total. The gold business class has full flat seats and several modern features for those who prefer stylish and luxurious travel.
What are your expansion plans?
We do continuously look at the number of the passengers and market demands and decide accordingly. As said earlier, we have increased our frequencies and are also periodically operating larger aircraft to meet the seasonal and expanding market.
Most of the flights made to Nepal are targeting migrant workers. How sustainable is this policy?
As mentioned in the TIA report, increased labor traffic accounts for around 80 percent of seat demand in all international airlines. All international carriers connecting to Nepal saw a robust increase due to this reason. We cater both to migrant workers and tourists. However, the majority of our traffic to Kathmandu is the migrant workforce working in the gulf countries. We foresee this trend to continue for some time to come.
What are your operational difficulties and facilities in Nepal?
There are no operational difficulties except the weather of course. As you know, we are sometimes forced to divert our flights to nearby Indian airports due to unfavorable weather conditions such as dense, fog etc especially during winter. However, with our split schedule flights, we have better timings for landing in Kathmandu.
How are you managing your ground handling staff and crew members?
We have Nepali speaking cabin crew in our team, who are deployed on the Kathmandu route most of the time so that our Nepali customers could feel at home. Almost all our staffs at the airport and city office are Nepalis.
How do you see the prospects of Nepal’s tourism sector? How is your airline contributing to it?
Tourism is one of the main industries in Nepal. The Nepal Tourism Year 2011 was quite successful. Through International air passenger movement, Nepal grew 13.35 percent in the first three months of 2012 with high migrant workers and tourist traffic. Kathmandu is one of the major tourist destinations with thousands of foreigners visiting the country for a variety of reasons.
The tourism sector is bound to expand as more and more people opt for unique and affordable destinations such as Nepal. We are able to connect more passengers than others to travel to Kathmandu via our Bahrain hub. The tourism campaigns or promotions by Nepali tourism authorities in the gulf countries can further help an increment in the tourist traffic to Nepal. I am proud to say that Gulf Air too has a role to play in the tourism development of Nepal as we cater to a large number of European tourists who find it convenient to fly with us.
‘An International Airport at Nijgadh can help Establish Nepal as a Transit Hub’
TRI RATNA MANANDHAR
Civil Aviation Authority of Nepal (CAAN)
What is the current scenario of International flights operating in Nepal?
Earlier, we had altogether 28 operators conducting international flights. Among them, three operators namely GMG Airlines, Kingfisher Airlines and Bahrain Air postponed their flights. Simultaneously, three other operators namely BB Airways – a Nepali airliner – along with two airliners from Malaysia, Air Asia X and Malaysian national carrier Malaysia Airlines were included. Air Asia X is operating from July 3 while BB Airlines is to commence from September this year. That is to say, some airlines are withdrawing their flights while some others are commencing their operations soon. However, the numbers of operators are back to 28 as it was before. There are 33 other airlines waiting in the wings with their air service agreements (ASAs).
The infrastructure bottleneck is often the constraint to provide international standards services to the airlines flying to Kathmandu. What exactly is the situation?
We must accept this fact. We are not being able to develop the infrastructure as per the growth of air traffic movements. That is why we are very often facing air traffic congestion at TIA. To address such problems, we are conducting various measures. First of all, a TIA Capacity Enhancement Project is going on with support from an ADB loan of US$ 70 million. CAAN itself is investing another US$ 30 million in the project. This US$ 100 million project will address the extension, expansion, and development of TIA which includes the civil infrastructures such as runway and taxiway extension, construction of additional parking bay etc. The development of equipment is another component that is also in our priority. These components are ATC automation and communication and navigation equipment. These tasks are part of the capacity enhancement project. We are also planning to separate domestic operators and shift them somewhere close to Kathmandu. Dhulikhel seems to be a possible location and a detailed feasibility study is being conducted for that purpose. We are looking at this alternative so that we can use the present TIA only for International operation.
How is CAAN addressing air traffic issues like landing and take-off, flow of flights and routes etc?
We have some problems in the international air route and we are inviting Indian authorities to Nepal to hold discussions on this very soon.
How improved has the passenger handling capacity of TIA become in the recent years?
We are continuously trying to improve our services. But I can’t say that the improvements are significant because of the limited facilities. Even the space is the same as we have been using before. Upon the completion of the ADB project, we would be able to enhance the passenger handling capacity and provide other facilities accordingly.
What happened to the plan of making TIA operational for 24-hours-a-day?
We are continuously exercising to operate that way. But there are certain things to be considered like manpower planning, reliability of the radar etc which are essential in making TIA operate for 24-hours-a-day. Besides CAAN, the immigration authorities and the security establishments also need to be prepared for it.
What is the overall air service infrastructure situation of Nepal?
In terms of airports and airport facilities, we (the Ministry of Culture, Tourism and Civil Aviation and CAAN) are aggressively involved in improving and increasing airport infrastructure. The project for constructing Gautam Buddha Regional International Airport at Bhairahawa is in the pipeline. The revised estimated cost for the project is US$ 77 million. Another project for a regional international airport in Pokhara is also proceeding for which China Exim bank has shown an interest to invest in.
How many of our airports are capable of handling international flights in terms of runways and other infrastructures in Nepal?
Airports in Bhairahawa, Nepalgunj and Pokhara are capable for conducting cross border flights with India. They can operate in Indian cities like Lucknow, Varanasi, Delhi and Patna. As for fullfledged international operations, we only have TIA to look up to.
Experts say that lack of direct international flights from major tourist destinations have resulted in great loss for our tourism sector. What is CAAN doing about it?
The entire aviation sector understands the value of direct international flights. The scenario of constructing Nijgadh International Airport has emerged due to this need. It’s been so many years that we are talking about constructing it but there is no achievement on this front so far. If the nation really wants to promote the tourism sector on a massive scale, a full-fledged international airport is a must as the present international airport (TIA) is not a full-fledged one. It has many constraints because of the terrain, runways and lack of other infrastructures. That is why it is not possible to operate long haul flights from the US and Europe. Landing a big aircraft is another impossibility given the present circumstances. If the tourists from countries in Europe and the US could travel directly to Nepal, it would have been convenient to us as well as the tourists. For instance, it takes a minimum of two stops and one has to spend more than 24 hours to travel from Europe to Kathmandu. All the pleasure and excitement is gone because the tourists feel exhausted and tired due to long flights. The travellers have to spend more hours in transit than on board the flights.
We are unaware of the exact tourism potentiality of Nepal. The President of International Civil Aviation Organization (ICAO) visited Nepal recently. He was shocked to hear that we were able to bring only about 700,000 tourists against our target to bring in one million tourists during Nepal Tourism Year 2011.
We will not be able to develop our tourism sector as desired if we depend entirely on TIA only. By constructing a full-fledged international airport at Nijgadh will not only enable us to operate long haul international flights but also help establish Nepal as a transit hub like Hong Kong and Bangkok.
What do you have to say about the fifth freedom rights of international airliners operating in Nepal?
We assure such rights in the Air Service Agreement (ASA) with international operators. The recent controversy with Air Arabia on the fifth freedom rights is meaningless. As per the provision of an ASA between Nepal and UAE, it is their right to seek so. If the international operators do not get their fifth freedom rights, they cannot run their businesses. We can’t even imagine building the Nijgadh Airport leaving aside such rights. Fifth freedom rights will help develop Nepal establish itself as a transit hub. But these controversies are hardly true for some other international airlines. More than 90 per cent international airlines are enjoying fifth freedom rights, for instance, Druk air is operating a flight between Kathmandu and Bhutan via Delhi.
‘Dragonair is Bringing a lot of People into Nepal’
Manager - Nepal
Hong Kong Dragon Airlines Ltd
Can you share the rate of increase in passengers flying to and from Nepal over the years?
Dragon air started its operation in Nepal in 1989. The service was halted in 2001 and re-launched in 2007. We have gradually increased our frequency and now have daily flights. We have increased the aircraft size with the increase in passenger numbers. We are taking more passengers to China, Japan, Australia and the US. These are the big destinations for us. Dragonair is also bringing a lot of people into the country especially during the peak tourist season from September to April.
How do you assess the quality of air service infrastructure in Nepal?
There have been some good changes at the TIA recently – for example, the new check-in desks and screens that have been installed at the international terminal. We hope for more improvements to be made in the future. It is very important to have a very strong main airport here in Kathmandu to act as a hub for inbound Nepali tourism.
What is the demand on the number of flights over the years? How is Dragon Air managing the supply to meet the demand?
We have the capacity to meet the growing demands. There is enough demand to utilise the capacity and thus, we increased the frequency to a daily flight in September 2011. We are quite optimistic about Nepal and will continue to monitor such situations. From the tourism perspective, a lot depends on the stability of things here in Nepal. If Nepal can get good coverage in other countries, the travel agents and airlines will be more willing to promote Nepal and the number of passengers will increase as well.
How cooperative have the Nepali government institutions been in helping meet the market demands?
I think the intentions are good. There are obviously a few constraints in Nepal, but many of these will fall off in a more stable environment. For now, we just need to continue working together to improve wherever we can and to focus on the positives. The Airlines Operating Committee which comprises airport representatives from most of the major carriers in Nepal continues to work with the relevant authorities to look for improvements wherever possible.
What are your unique selling points? How aggressively are you marketing them?
One of the unique selling points of Dragonair is having Hong Kong as its hub. We have fantastic connections, and together with our sister airline Cathay Pacific, we are capable of connecting passengers to over 160 destinations worldwide. In Hong Kong, the minimum connecting time with Cathay Pacific has been reduced to 50 minutes which gives passengers more choice and convenience. There are many destinations from Hong Kong within a relatively short distance – half of the world’s population within five hours. On the long-haul side of things, we connect to New York four-times-daily. We look at the possible frequency rather than relying solely on our capacity. We want to give passengers more choice, which means provide more departure time wherever sustainable.
Dragonair’s world-class service and quality products have long been recognised – we’ve won the Best Airline – China category for six consecutive years in the respected Skytrax passenger survey and we were also voted the “World’s Best Regional Airline” in 2010 and 2011. Dragonair’s major strength is China. We fly to 19 destinations in mainland China and operate about 400 flights a week. Adding to it, our sound safety record, well-trained and professional staff, and good on-time performance are the positive sides to focus on.
Airlines flying to Nepal are said to have very few business class seats. Is it true that airlines do not see prospects for business class market here?
Asia has shown its ongoing potential and resilience in the face of the current global economic downturn. Until now, Nepal has widely been regarded as a leisure travel destination. We are optimistic that, with stability, business and industry here can grow and along with it, the demand for business travel will rise. We actually have a decent number of business class seats on our Airbus A330 aircraft, but it would of course be nice if passengers originating from Kathmandu could fill more of those seats.
What are your operational difficulties and privileges received in Nepal?
The weather is always a challenge for airline operations and it is no exception here in Nepal. We have worked with the authorities and our own engineering teams to overcome the constraints we face here, so as to ensure timely operation as much as possible. This is particularly important in the context of the airport operating hours (the airport closes after midnight). The ever increasing number of tourists would definitely benefit from further improvements at the airport, and we will continue to support positive initiatives from the authorities in that direction.
It is said that operating in Nepal is very cheap despite having poor infrastructure. What are its advantages?
While operational cost is one of the many factors, we look at running our business anywhere. We see Nepal more for its market potential i.e. its attractiveness as a destination and travel demand to other countries like US, Australia, Japan, Korea and of course Hong Kong and China.
What are your expansion plans?
We continue to look forward to opportunities in Nepal and act accordingly in terms of available possibilities. We will increase frequency if we continue to see good growth in passenger numbers at sustainable yields. Basically, we will react to the situation, and we’re optimistic that the outlook for Nepal is bright.
On a larger scale, Dragonair is adding six aircraft: four Airbus A320s and two Airbus A330s to the fleet this year - expanding the size of the Dragonair fleet from 32 to 38. Two additional A320s and one A330 have already entered the fleet this May. In terms of Dragonair’s network this year, we launched flights to Jeju on 01 May (three flights per week), to Chiang Mai on 01 July (four flights per week) and to Kolkata, India in winter 2012 (four flights per week). Flights were also resumed to Taichung on 14 May (twice daily), to Guilin on 01 May (daily), and Xian on 01 Apr (daily).
‘Thai Airways was the First Airline to Operate Jet Service to Nepal’
Nepal & Bhutan
Thai Airways International Public
You are going to complete 44 years of operation in Nepal. How has been the journey so far?
The history of Thai Airways International in Nepal dates back to 1968 when the inhabitants of Kathmandu had their first glimpse of THAI’s 72-seater French built Caravelle SE210 aircraft which touched the unfamiliar runway of Tribhuvan International Airport (TIA). We are going to complete 44 years of our operation in Nepal this year.
THAI was the first-ever airline to operate jet service from Kathmandu and the airline that opened up the forbidden Himalayan Kingdom as a new tourist destination to the world. It was a spectacular and memorable event in the Nepali Aviation history.
THAI also introduced the first computerized reservation system in Kathmandu in February 1985 and provided this facility to its leading travel agents since 1990. Royal Orchid Lounge at the TIA used to be the only lounge operated by THAI in the 1990s. However, after Nepal Government adopted liberal sky policy, many other international airlines joined the race. Our monopoly market share has been diluted a little bit but we are enjoying the competition. It has given us the opportunity to prove ourselves as the first choice carrier in terms of our fleet size and service standards.
What is the demand status on the number of flights over the years? How are you managing the supply to meet the demand?
Being a pioneer and well renowned carrier, THAI always had the strategy to adjust the number of flights as per market demand. In the beginning, we operated once a week flight between Bangkok and Kathmandu and soon after that, one more flight was added to cope with the high demand of passengers. THAI started daily flights with A300-600 aircraft since the end of October 1997. In the context of growing demand of air seats to/from Nepal, we added three more flights in 2008. Based on the request of different tourism related associations like NATTA, PATA, HAN and NTB, we began to run 10 flights per week. Now we have seven flights a week with a configuration of 30 business class and 279 economy class seats.
Thailand has been one of the most popular destinations for outbound tourism for the Nepalis. What is Thai Airways’ contribution to it?
Thai Airways has played a leading role in the development of tourism not only in Thailand but also in helping Nepal in worldwide promotion as a major tourist destination through various media like our in-flight magazine “Sawadee” and Royal Orchid Holiday Packages tours. Besides performance, punctuality, and silk class services to our valued customers, we have joined hands with the Tourism Authority of Thailand by frequently organizing different events like Trade Fairs, Educational/ Medical fairs, familiarization trips for agents and media, Thai Food festivals, Thai Puppet shows etc. We also offer attractive packages and special fares for students and leisure travelers.
How has Thai Airways been promoting Nepal at the international level?
Thai Airways was the first airline to operate jet service to Nepal and introduce this country to the world. These days, many airlines are inspired to operate their services in this country due to our successful operation for the past 44 years. THAI had actively participated in “Visit Nepal Year 1997” and spread good word all over to promote “Nepal Tourism Year 2011” as well. We joined hands with the organizers of Asian Mountain Bike championship in 2008 by offering special fares to the participants all around the world. In addition, we organized a big puja same year to introduce Lumbini to the pilgrims from all around the world. This year, we are going to sponsor the famous Nepali musical group “Sur Sudha” to perform in Thailand.
How cooperative are the Nepali Government institutions in helping meet the demands from this market?
Thai Airways has been getting a very constructive support from the government bodies in Nepal. This is one of the reasons behind our uninterrupted service for the past 44 years. We have always been able to bring into operation the required number of flights connecting Kathmandu and Bangkok as per our market demand. This cooperation is good for both the countries in terms of tourism, economy, education and other sectors. We are thankful to the Nepal Government, NAC, CAAN, TIA, ATC, NTB, NATTA and PATA for the continued support extended towards THAI.
Most of the flights made to Nepal are targeting migrant workers. How sustainable is this policy?
Labor traffic does not occupy a major business of our flight operations, it is only a partial business of our total occupancy. Since the very beginning, we have had different segments of traffic like the royalties, frequent flyers, government officials, diplomats, expats, students and the tourists. Labor traffic is also part of our business but as I said we don’t depend heavily on it.
What are the operational difficulties and facilities in Nepal?
Lack of proper infrastructure, unstable government, political instability and unhealthy competition among budget airlines are the drawbacks hindering smooth operation of the renowned carriers such as THAI.
Operating in Nepal is said to be cheap. What is your experience?
We do not think operating in Nepal is cheap. On the contrary, it is one of the most expensive in terms of ground handling, parking and landing, ground space, rental, ramp, fuel and all kind of other charges.
How are you managing your ground handling staff and crew members?
THAI has its own handling service in Nepal. It has never compromised in quality services; therefore, we have our own operational, ground handling and administrative staff directly under the THAI set up of course.
GSAs that Fuel the Business
By Gaurav Aryal
Around 85 per cent of international airlines operating in Nepal have made their presence felt through a number of GSAs
International airline companies operating in Nepal prefer having a presence through their General Sales Agents (GSA) rather than having their local office stationed in the country. Around 85 per cent of international airlines operating in Nepal have made their presence felt through GSAs. Out of the 28 international airlines currently in operation, only four of them, namely Thai Airways, Air India, Qatar Airways and Etihad Airways have their country offices in Nepal. A source at a leading travel agency under the condition of anonymity said “It’s not only offline but also the online airlines that are operating through their GSAs in Nepal.”
Sunil Sharma, Managing Director at Society Travel Service Pvt Ltd said that offline GSAs could be of any number as travel agents have Special Prorate Agreement (SPA) with offline airlines on a code sharing basis. He said that such offline airlines carry transit passengers flying from Nepal to various sectors and destinations around the world. Sharma, who is also a GSA of RAK Airways said, “It would be a major headache for airline companies to have their office setup here and run after various things ranging from policies to issues regarding aviation fuel. The airlines feel it would be a waste of time as the documentation procedure here is difficult along with the bureaucratic hassles. GSAs have the knowhow about local issues and it would be easier for the airlines to operate through GSAs who are handed over with specific duties and responsibilities.”
Similarly, it is believed that the GSAs have a greater knowledge on the local market as they are the local partners that have been in existence for a long time. “GSAs bear expenses, mobilise local staff, have detailed information about the local market, and having a GSA is cost effective than having an airline office established here. So, the international airlines prefer having GSAs rather than setting up their local offices of their own,” said the source. GSAs, usually the agent for sales of air tickets, are also the partner for marketing the airlines they represent. The source said that airlines and agents in Nepal jointly carry out marketing campaigns for the airlines. According to the source, the travel agencies are lured to work as GSAs because they receive override commissions along with additional commissions and other benefits like travel certificates, and staff trainings among others. Sharma also said that GSAs work on override commission and set up office, hire staff required at the corporate office and even at the airport. However, ground handling is not allowed to be performed by GSAs as it is taken care of by Nepal Airlines Corporation for every airline other than Thai Airways and Air India. “The majority of the clientele of GSAs are anybody going abroad, be it tourists, migrant workers, students, business persons, visitors, expatriates and everybody else who is travelling,” said a source at a leading travel agency. The source added that the ratio of Nepalis to foreigner passengers is 75:25 per cent. Sharma said that the companies that work as GSAs for passenger segment are also the Cargo Sales Agents (CSA) with the respective airlines. Sources said that GSAs have been operating in Nepal for over three decades now.
However, sources said that it is difficult to exactly pin point the size of the GSA market and their respective market share because everything depends on the demand and supply of flights. They added that the demand and supply keeps on varying constantly.
The number of international air passengers flying to and from Nepal has increased over the years and so has the number of flights. In the first three months of this year, 717,182 international air passengers travelled via Nepal. According to the data of Nepal Tourism Board, 207,961 tourists arrived in Nepal via air route from January to April 2012. It is a 23.1 per cent increment from 168,958 tourist arrival during the same period of 2011. The major reason behind the increment in air passengers is the increase in tourist inflow and migrant workers going abroad in search of job opportunities, according to Ratish Chandra Lal Suman, General Manager at Tribhuvan International Airport. President Tours and Travels (PTT) represents around half-a-dozen airlines as their GSA. Gulf Air, Qantas Airways, Kenya Airways, United Airlines, Air Mauritius, Indigo Air are some of the airlines that it represents but PTT is the passenger sales agent for United Airlines and Indigo Air. Similarly, Zenith Travels Pvt Ltd, another travel agency represents Bahrain Air, Sri Lankan Airlines, Spice Jet, Turkish Airlines and Qatar Airways Cargo as their GSA.
New Airlines in Nepali Sky
By Dipa Baral
AirAsia X has already started operations while Malaysia Airlines and BB Airways are planning to operate international flights from September this year
Nepal is on the way to become an international air hub, thanks to the rise in the number of tourists and labour traffic in the past few years. AirAsia X, the budget carrier of AirAsia, has already started operations from July 4 this year while Malaysian national carrier Malaysia Airlines and Kathmandu based BB Airways are planning to operate international flights from coming September. Besides, some prominent countries have shown interest to sign Air Service Agreements (ASAs) or to review the past ASAs with Nepal. AirAsia X has started scheduled flights between Malaysian capital Kuala Lumpur and Kathmandu two times a week i.e. Tuesdays and Thursdays and has plans to add two more flights from September this year. The airline has priced its ticket at Rs 11,000 (exclusive of taxes) for one way trip. “The ASA between Nepal and Malaysia allows Malaysian airliners to operate 21 flights a week. But, AirAsia X has taken the permission to operate seven flights a week at the most,” said Suresh Acharya, Head of Air Services Agreement, Airlines and Airport Operation Division at the Ministry of Culture, Tourism and Civil Aviation (MoTCA).
BB Airways, promoted by TBI Group of Non Resident Nepalis (NRNs) in Japan, will also operate flights from September 13 this year. The company has already brought a Boeing 757-200 (ER) on wet lease that will operate nine flights a week to Doha and Malaysia. “We will bring another aircraft of the same category after a month of our formal operation and operate 17 flights a week,” said Shishir Bhatta, CEO of BB Airways. The company will also add Singapore and Bangkok to its destinations after getting another aircraft on lease.
BB Airways had acquired a license for international operations from the MoTCA in the first week of January 2012. “We are aiming to promote Nepali identity all over the world through our international air service and aspire to place Nepal in the global travelling map,” said Bhatta. The airways has not made public its flight rates yet but informed that the ticket booking will be available both online and via travel agencies.
The third airline in the pipeline to commence international air service in Nepal is Malaysia Airlines, the national flag carrier of Malaysia. “It’s been more than a year since Malaysia Airlines obtained operating license from the ministry. It has plans to start flights from coming September,” said Acharya. The airline has a permission to operate seven flights a week between Nepal and Malaysia. Similarly, four countries— Vietnam, America, Australia and Indonesia—have shown interest to sign ASAs with Nepal while United Kingdom (UK), Jordan, Pakistan, Bhutan and United Arab Emirates (UAE) want to review their past ASAs. “We have not been able to translate the talk into action because of Nepal’s vague stance on fifth freedom. When the world is practicing freedom right up to the ninth, we are still arguing over granting fifth freedom right,” said Acharya. In December 2010, the government had to bar Air Arabia from exercising its fifth freedom right to fly on the Kathmandu- Kuala Lumpur sector at the eleventh hour following pressure from Nepal Airlines Corporation (NAC). The national flag carrier had claimed that the decision will make serious impact on its business. The case is now pending in the Supreme Court. “Rather than restricting the government from signing deals with international airlines, it must concentrate on its own capacity building and adopt aggressive marketing strategy,” said Acharya. He underscored the need of networking, partnership and alliance with other airlines to sustain in the present world. However, if NAC had believed that Air Arabia’s fifth freedom right would jeopardise its existence, it is yet to see what impact the entry of these three new airlines will make. “Once the new airlines commence operation, the competition will become even tougher because they will certainly end NAC’s monopoly in catering to the labour traffic. But, we cannot hold the market for NAC as the country has been practicing liberal sky policy. It is high time that NAC improved its services and got ready for competition,” said Acharya.
The MoTCA has also issued a 45-day public notice on May 25 inviting domestic operators to apply for international operation. The notice has invited applications for a chartered and a cargo flight each. Companies having paid-up capital of Rs 500 million and security bond of Rs 5 million can apply for the license by paying Rs 50,000 to the ministry and avail the document of Terms of Reference (ToR). The companies should also pay Rs 50,000 per route as royalty.
“So far, Siddartha International Airlines has applied to operate a chartered flight. But we hope to get some more applications as there is still enough time to apply,” said a high level official at the MoTCA.
Five Airlines: One Destination
By Sushila Budhathoki
Nepal experienced the formal beginning of aviation in 1949 when a lone 4-seater Indian Beechcraft Bonanza aircraft arrived in Kathmandu
With 27 per cent arrivals and 14 per cent departures out of the total passenger movement in the year 2011, the airline companies originating from India contribute a large chunk of the international passenger movement in Nepal via its flights to Kathmandu. According to the TIA passenger manifest, the airlines from India registered passenger arrival numbering 354,738 out of the total of 1,292,515 passengers that landed in Nepal and 377,867 departures out of the total 1,407,512 departing passengers. Nepal experienced the formal beginning of aviation in 1949 when a lone, 4-seater Indian Beechcraft Bonanza aircraft arrived in Kathmandu. And after a decade, Himalayan Aviation Dakota had the first charter flight between Calcutta (now Kolkata) and Kathmandu. Airlines from India came into business operation from 1953. More than half-a-century of existence in the Nepali sky, Indian airliners still prove to be among the leading carriers that bring substantial number of passengers to Nepal. Ranjan Pokhrel, Head of the International Relations Department at CAAN, says, “If we look into the history of Nepali aviation, we find that the Indian airliners have made a significant contribution to Nepal’s aviation development.” He adds, “Indian airliners are important not only for the aviation sector but also to the economic, social and cultural aspects of Nepal. They are contributing towards providing transport facilities, bringing Indian tourists and strengthening the high level political relationship between Nepal and India from the beginning.” Currently, there are five Indian carriers - Air India, Jet Airways, Jet Lite, Indigo Airlines and Spice Jet - operating between Nepal and India. Kingfisher Airlines, once a major operator on the Kathmandu-Delhi route, has postponed its many international flights including the Kathmandu sector. Air India now operates 32 flights in a week which includes a daily flight between Kathmandu and Delhi and 4 flights a week on the Kathmandu-Kolkata and Kathmandu-Banaras routes. Similar is the story of another Indian carrier Jet Airways which operates a daily flight each on the Delhi-Kathmandu and Mumbai-Kathmandu sectors. Jet Lite, Spice Jet and Indigo have one flight each on the Delhi-Kathmandu route on a daily basis.
Nepal Airlines Corporation (NAC), the only Nepali airlines which pioneered flights to Indian cities has now postponed its flights since November 2011. It used to fly to Patna, Calcutta, Mumbai and Bangalore earlier. In the last two decades, NAC has not added any new aircraft. Pradip Karki, Director of Traffic Management at NAC, however, assures that flights to Indian destinations will resume soon. He says NAC must resume flights to India with a new fleet and the government should support the idea. He adds, “We have discussed and signed an MoU with the aircraft manufacturing company to either buy or lease aircraft. There may be Airbus A320 - a 150 seater or A330 - a 250 seater that will operate flights to India in the future.” Most Indian carriers are said to be low cost carriers (LCCs) when compared to other airlines. The fare for the economic class seats starts at Rs 6,300 while business class seats cost a maximum of Rs 34,000 on the Kathmandu-Delhi route. Many other international airlines have started to fly in the same route and the competition has grown stronger. TK Saha, the Country Manager at Air India says that his team is happy with the sector. “In spite of severe competition by other international airlines as well as Indian competitors, we are maintaining and operating our flights with an average of 74 per cent occupancy,” he adds.
Nepali and Indian aviation authorities reviewed the Air Service Agreement (ASA) in 2009 to permit Nepali airline companies to fly 24 destinations in India. As per the reviewed ASA, airlines from Nepal can increase their weekly seat capacity up to 30,000 for six metropolitan cities -<