SANGAM

Unity Air plan to operate international hits snag

SANGAM PRASAIN
KATHMANDU, MAY 26

The Civil Aviation Authority of Nepal (CAAN) has said the air operator certificate (AOC) would not be issued to the Unity Air, run by Unity Life International, a network marketing which the government banned recently.

The airline has been issued the license to operate both domestic and international flights. The airline had planned to purchase a 150-seater jet for Rs. 6 billion for international flight.

On March 23, Unity Air, a new player in the aviation sector, was permitted international operation license by the Ministry of Tourism and Civil Aviation (MoTCA). It acquired the domestic license on October.

In the first phase, the airline had targeted Doha and Dubai, which are major Nepali labour markets. It had also planned to operate a daily flight in the Kathmandu-Delhi sector.

In the second phase, Unity Air had a plan to fly Kathmandu-Delhi, Kathmandu-Doha, Kathmandu-Dubai and Kathmandu-Kuala Lumpur by the end of 2010.
After the finance ministry directed its subordinate bodies to suspend all bank accounts in the name of the company and stop sale of all fixed assets including vehicle in the name of the company, the CAAN also initiated the move of not issuing the AOC to the airline.

“In this state, we will not issue the AOC,” said Ram Prasad Neupane, director general of CAAN.

As per the civil aviation regulations, Unity Air should put up a security bond of Rs. 5 million and have a paid-up capital of Rs. 500 million to get the AOC. The terms of reference document costs Rs. 50,000.

On the domestic side, the airline had paid-up capital of Rs. 150 million and bank guarantee of Rs. 1 million.

Similarly, an airline operating on the international route needs to pay Rs 500,000 per route of operation as royalty. For domestic route, it has to pay Rs 5,000 per STOL (short take-off and landing) and Rs. 10,000 for hub airport route.
An airline that has fulfilled the terms of reference to go international must obtain an air operator certificate within six months and start flights within a year of acquiring it.
The airline loses the security amount, bank guarantee fund and license if it does not acquire the AOC within six months, said Birendra Kumar Singh, under secretary at the civil aviation ministry.

Singh said the finance ministry had not issued any letter to scrap the license so far. Ministry of Foreign Affairs, however, has sought the company’s business plan submitted to the MoTCA.