Yeti, Tara merger plan on hold pending probe

SANGAM PRASAIN
KATHMANDU, APR 08 -

The planned merger between Yeti Airlines and its subsidiary Tara Air has been put on hold pending completion of an investigation by the Ministry of Tourism and Civil Aviation.

“There are three different cases related to Tara Air which are being investigated by separate committees in the ministry,” said Joint Secretary Suresh Acharya. “As they are all serious cases, the authorization to merge cannot be granted until they have been finalized.”

Yeti Airlines had applied to the ministry to merge with Tara Air about one and a half months ago in a bid to restore its subsidiary’s image which had been damaged after a Twin Otter crash on Dec. 16, 2010. Tara Air’s Canadian-built aircraft (9N AFX) met with an accident at Shripur in Okhaldhunga district killing all 22 passengers and crew aboard. All the passengers were Bhutanese nationals.

The aircraft investigation committee has been given another 30 days to submit its report on the crash as it failed to do so within the 90-day deadline it was originally given.

A second committee has been formed to probe the issue of the deceased passengers who were all revealed to be Bhutanese citizens but travelling as Nepalis under false ID. Similarly, the third case is related to Tara Air’s taking extra payment from the passengers in the name of service charge.

“All these issues should be cleared before the merger can happen,” Acharya said. If Yeti applies to acquire additional aircraft, it wouldn’t be any problem to authorize the carrier to do so. But merging Tara Air or its property with Yeti Airlines cannot be permitted at present, he added.

“The merger process of any company takes time; and in the case of Tara Air, the process will take longer as there are several legal issues to be investigated before they can be permitted to merge,” said Kishore Thapa, secretary at the ministry.

Ministry officials also alleged that Yeti Airlines was trying to reduce its financial burden after its insurance premiums were hiked following repeated crashes. “We have been informed that insurance companies have increased the premiums after repeated crashes,” a ministry source said.