Made in China

After signing purchase agreement for six aircraft, including two on grant assistance, from China in November, 2013, Nepal Airlines Corporation (NAC) had hoped to expand its domestic market share and give a tough competition to privately owned airlines which had eaten away its market share over the past one and half decades. But less than two years after signing of agreement and less than a year of operation of two Chinese aircraft – MA 60 and Harbin Y12e, the hope seems to have evaporated.

Nepal and China had signed Framework Agreement on Provision of Concessional Loan Assistance and Economic and Technical Cooperation Agreement for Grant Assistance worth Rs 6.77 billion on November 28, 2013. The agreement states China will provide a grant of Rs 2.94 billion to procure a 19-seater Y-12e and a MA60 in grant, whereas China EXIM Bank will fund Rs 3.72 billion in soft loans to buy three Harbin Y-12e and Modern Ark 60 (MA60). As per the agreement, Nepal has already taken delivery of one MA 60 and one Harbin Y12e which have been given as grant. Remaining four aircraft are expected to join NAC’s fleet this year.

But NAC has been facing host of issues with the new aircraft. MA 60, for example, has remained grounded for about 90 days due to different problems in the aircraft like problems with landing and take-off weight, untimely delivery of spare parts, and high cost of spare parts. Both the Chinese aircraft in its fleet have not been able to carry passengers as per their capacity. The 56-seater MA60 can carry a maximum of 48 passengers while taking off from airports outside Kathmandu. Similarly, the aircraft is not capable of carrying additional cargo. The 18-seater Harbin Y12E weighs 200 kg more than what the manufacturer had specified. This means it can carry only 12 to 15 passengers while taking off from airports outside Kathmandu.

Because of these problems, NAC officials are mulling over canceling the purchase order for remaining four aircraft. They are already delaying renewal of insurance policy of MA 60 for which the national flag carrier has been paying high premium.

After listening to complaints from NAC, Chinese officials held a tripartite meeting with NAC and tourism ministry officials. They have promised to improve delivery of spare crafts and assured NAC to send a team to conduct a study on why the aircraft are not operating as per their payload capacity.

NAC is trying to recover its lost market share and glory by expanding its fleet. But its experience with Chinese aircraft has remained bitter. If Chinese aircraft are not suitable for Nepal, NAC should return them and cancel order for the remaining aircraft and go for other suitable aircraft. NAC should act before it is too late.