Nepal is an increasingly growing market for most foreign airlines operating in the country. This growth is fuelled mainly by the increasing outflow of migrant workers, and, to some extent, the gain in tourist arrivals in a market where the presence of the national flag bearer, Nepal Airlines Corporation (NAC) remains shrunken.
--By Akhilesh Tripathi
Nepal’s international air travel market is growing fast. Available statistics shows that during the decade-long period from 2004 to 2013, international air passenger traffic at the Tribhuvan International Airport (TIA), the country’s only international airport, rose more than 2.75 times - from 1.14 million in 2004 to 3.14 million in 2013. The Civil Aviation Report 2014 published by the Civil Aviation Authority of Nepal (CAAN) shows that the number of air passengers to and from Nepal has consistently risen during this period, registering, on average, a robust double-digit growth of 11.9 per cent per annum.
The growth has continued in 2014. The flow of international passengers in the first nine months of 2014 has been impressive. In the first nine months of 2014, more than 2.54 million passengers availed air services via TIA – an increase of about 12.9 per cent in passenger movement, compared to the same period of the previous year. More than 2.54 million international passengers availed air services through TIA in the first nine months of 2013.
The rising number of foreign airlines operating in Nepal and the ever-increasing number of international flights to and from TIA further illustrate this growth. There were 15 foreign airlines, besides the then Royal Nepal Airlines making international flights to and from TIA in 2004. Coming to 2013, the number of airlines making international flights to and from the country had risen to 27. Though this number came down to 25 in 2014, the decrease was more than compensated by the increased frequency of flights by the airlines which continued their Nepal operations. The 25 airlines operating in Nepal in 2014 connected Kathmandu to 23 different cities of the world, making an average of 275 flights per week during summer schedule and 279 flights per week during winter schedule, according to CAAN Souvenir 2014.
International flight movement at TIA grew 2.6 times over the 2004-2013 period. In 2004, the number of international flights to and from TIA was 9,062 – 4,528 arrivals and 4,534 departures. Coming to 2013, this figure rose to 23,619 – 11,812 arrivals and 11,807 departures. International flight movement at TIA registered a growth of about 15.78 percent in the first nine months of 2014, compared to the same period of 2013. In the first nine months of 2014, the number of international flights to and from TIA stood at 19,739 – 9,866 arrivals and 9,873 departures. TIA saw a total of 17,049 international flights – 8,525 arrivals and 8,524 departures – in the first nine months of 2013.
While seven airlines (GMG Airlines, BB Airways, Kingfisher Airlines, Bahrain Airlines, Gulf Air, RAK Airways and Jet Lite) have suspended their Nepal operations over the last two years, six new international airlines are poised to serve TIA in 2015. They include Dhaka-based Regent Airways, Malaysia-based Malindo Air, Chengdu-based Sichuan Airlines, Colombo-based Mihin Lanka, and Kathmandu-based Himalaya Airlines.
An Estimated Business of Rs 85 Billion
The annual international flight service business in Nepal is said to have reached around Rs 85 billion at present. More than 90 per cent of this steadily growing business is in the hands of foreign air operators. Apart from the NAC, Buddha Air is the only Nepali airline operating international flights to and from Nepal at present. But Budhha’s services are currently limited to the Kathmandu-Varanasi sector; flights to Paro of Bhutan and another Indian city Lucknow were not sustainable. NAC which currently serves the international sector with two ageing Boeing 757s flies to only four destinations – Kuala Lumpur, Hong Kong, Doha and Bangkok.
According to the passenger movement data of the first nine months of 2014, Qatar Airways flew the highest number of passengers. The Doha-based airliner flew a total of 246,361 passengers in this period. India’s Jet Airways secured the second spot. Its passenger occupancy grew to 231,664 travellers in the first nine months of 2014.
The performance of NAC has further deteriorated as the national flag bearer slipped to the seventh spot in the January-September period of 2014, from sixth position in 2013. NAC flew 146,224 travelers in the first nine months of 2014.
Growing Popularity of Budget Airlines
The popularity of low-cost airlines has been constantly rising in Nepal. Five budget carriers — Air Arabia, Fly Dubai, Air Asia, SpiceJet and Indigo - flew a total of 758,893 passengers or 29.78 per cent of the total air travelers in the first nine months of 2014. In the same period of the previous year, these five carriers had ferried a total of 444,982 passengers or nearly 26.4 per cent of the total air passengers of 1.57 million.
The growing popularity of low-cost carriers is also demonstrated by the fact that Air Arabia and Fly Dubai stood third and fourth in the first nine months of 2014 in terms of passenger movement, transporting 197,611 and 175,151 passengers, respectively.
State of the National Carrier
NAC’s performance in terms of international flight operations hasn’t improved. Over the past decade, NAC has suspended its flights to many international destinations, one after another, due to lack of aircraft. As a result, more than 90 per cent of the international aviation market in Nepal is in the hands of foreign airlines at present.
However, things are likely to change for the better for the national flag bearer as it is poised to acquire two brand new Airbus aircraft in the next few months. According to NAC officials, both aircraft (A320-200) have 158 seats each. The first aircraft will arrive in Kathmandu on February 8 and the other sometime in April. The NAC plans to resume flights to four of its old destinations – New Delhi, Mumbai, Bangalore and Dubai – and add a new destination, Guangzhou of China. This will increase NAC’s total number of destinations to nine from the present four. NAC officials hope that the acquisition of the two new aircraft will help increase its annual revenue to Rs 15 billion from the present Rs 7-8 billion.
NAC has also prepared a 10-year plan (2015-2024). Based on this plan, NAC has forecast its annual revenue to reach USD 134 million in 2015, USD 323 million by 2020 and USD 425 million by 2024. To achieve these targets, NAC will be operating nine aircraft in the international sector.