The economy may have slowed to a crawl, but Nepal's aviation sector is taking off
SANGAM PRASAIN
The economy may not be growing by leaps and bounds, but it hasn't stopped domestic airlines from expanding. The domestic aviation sector is seeing new companies entering the scene and carriers expanding their fleets and spreading their wings beyond Nepal's borders.
With the country celebrating 2011 as Nepal Tourism Year with the aim of bringing one million tourists, the bustle in the aviation sector is understandable. The latest entrant is Goma Air that has two single-engine Cessna Caravan aircraft in its fleet. There are now nine domestic airlines and five helicopter services operating in the country.
Domestic airlines have been eyeing international operations. Their success in the domestic arena has made them confident of starting international flights. Buddha Air, after establishing itself strongly in the domestic domain, started international operations last year.
With the national flag carrier Nepal Airlines Corporation in a state of perpetual stupor, five domestic airlines have been inspired to join hands to start international operations by establishing a new company. Buddha Air, Yeti Airlines, Guna Airlines, Agni Air and Simrik Air plan to start international operations by May 2011.
Another indication of the country's aviation sector taking off is the 62 percent surge in domestic passenger movement and 36 percent rise in aircraft movement in the last 10 years (2000-09).
Remote areas: Next business prospect
Difficult geographical terrain and lack of roads in many parts of the country have provided the aviation sector huge business prospects. Single-engine aircraft are back in Nepal's skies. Many aviation entrepreneurs say the next big business for domestic aviation would be remote areas. Buddha Air's managing director Birendra Basnet is one of them. "The next big business scope for domestic airlines is remote areas," said Basnet. "As this sector is less competitive and the cost of operation is also less, there is profitability in this sector."
Unlike ‘trunk routes’ – long distance routes -- where there is stiff competition, the remote sector is still a virgin market. With single-engine aircraft relatively cheaper to acquire and operate, domestic airlines are now opting for them. In a country where flying is not only a luxury but also a supply and communication lifeline for remote areas, availability of more air seats and cargo space is in itself a major development.
Domestic carriers that were reluctant to fly in remote areas are now taking the lead in remote area service. As of now, four airlines -- Tara Air, Air Kasthamandap, Makalu Air and Goma Air -- are operating services with single-engine aircraft. Recently, Akash Bhairav Aviation has been issued an AOC for single-engine operation. The airline plans to bring two single-engine planes.
Known for their short take-off and landing (STOL) capabilities, single engine aircraft are perfect for Nepal's mountainous terrain. These planes are best suited to transport essential goods to remote places that do not have access to roads or infrastructure to handle double-engine aircraft.
Except for Tara Air, the other three airlines flying single-engine aircraft have made Surkhet their base, targeting remote areas of the Mid-West and Far West. According to Goma Air's chairman Upendra Bhattarai, the carrier is planning to provide services to Mugu, Bajhang, Bajura and Doti in the first phase before expanding to other remote areas. Air Kasthamandap has been operating flights to Jumla, Dolpa, Mugu and Humla districts from its base in Surkhet.
Infrastructure development: An urgent need
Despite bright prospects, infrastructure bottlenecks could undermine the success achieved so far. Hence, urgent steps are needed to upgrade and develop aviation infrastructure. The country's only international airport, Tribhuvan International, is overstretched with a rise in international and domestic aircraft.
Birendra Bahadur Deuja, an aviation expert and former director general of the Civil Aviation Authority of Nepal (CAAN), said business prospects in the aviation sector are bright. "However, there should be more investment by the government as the current investment in the aviation sector is very nominal," said Deuja.
According to CAAN Deputy Director Tri Ratna Manandhar, there is a dire need to improve airport technology in line with international standards. “The government should increase investment in the air navigation and surveillance system as Nepal has been receiving pressure from ICAO to improve airport standards," said Manandhar.
The government has been working to establish a second international airport and three regional international airports. South Korea’s Landmark Worldwide Company that was assigned to do a detailed feasibility study for the airport has already presented its report to the government. According to the report, a single-runway airport at Nijgadh can be finished in 2015 if construction is started this year. Landmark's feasibility study stated that the proposed international airport could handle five to 15 million passengers annually and even accommodate the super jumbo Airbus 380 after the first phase of construction.
The government has also been working to develop Janakpur, Pokhara and Bhairahawa airports as regional international airports. The expansion of these three airports would open the way for more cross-border flights between Nepal and India. The expansion of Janakpur airport into a regional international airport can attract a large number of Hindu pilgrims while Bhairahawa's expansion could give a boost to Buddhist pilgrimage.
International operations: Still cautious
The new Air Service Agreement (ASA) signed between Nepal and India in September 2009 has opened the way for cross-border flights between the two countries. The ASA has increased the number of weekly flight seats to 30,000 and opened 10 new destinations for Nepali airlines permitting them to fly to 21 destinations in India.
Buddha Air has already planned to connect seven Indian cities by the end of 2011. In the first phase, it plans to link Lucknow, Kolkata and Patna. In the second phase, it plans to extend its service to Varanasi, Guwahati, Derhadun and Gorakhpur.
Despite having started international operations to Bhutan and Lucknow, Birendra Basnet sounds cautious about Nepali airlines going international. Before Buddha, four Nepali private airlines -- the now defunct Necon Air, Cosmic Air, Air Nepal International and Fly Yeti -- started international operations which were subsequently discontinued. "Given our capacity, we should not go forward aggressively," said Basnet. "Instead, we should look at capitalising on markets where there are large numbers of Nepali migrant workers."
The new international airline being promoted by five domestic carriers is eying major tourist hubs in the region for its business. “As per our plan, we will serve the Gulf countries, Malaysia, India, China and Singapore,” said one of the promoters. They are hiring an international management team including the chief executive officer to run the five-airline consortium.
Despite having more than a dozen fixed-wing and helicopter companies, sustainability has been the major issue. The demise of Necon, Cosmic, Shangri-La, Everest, Nepal Airways, Lumbini, Gorkha and other carriers are some of the unsuccessful stories in Nepal's domestic aviation. But entrepreneurs now seem determined to take lesions from the past.
Domestic passenger movement
Year No. of Passengers Change
2007 91,6429 3.8%
2008 1,036,586 13.1%
2009 1,377,868 32.9%
2010 1,073,391 (Jan-Sept) -----
Domestic flight movement
Year No. of Passengers Change
2007 65443 6.8%
2008 69286 5.9%
2009 76191 10%
2010 55,345 (Jan-Sept) ------
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