The Tourism Ministry’s plan to induct a strategic or management partner at Nepal Airlines Corporation (NAC) has taken another slow step forward with the formation of a panel to study how this will be done.

The five-member committee put together on Thursday is led by Joint Secretary Buddhi Sagar Lamichhane of the ministry. Alok Chandra Shrestha, joint secretary at the ministry’s legal division, Ganesh Bahadur Chand, deputy managing director, and Brihat Tuladhar, deputy director of NAC, are the other members of the committee. Pramod Nepal, under-secretary of the ministry, is its member-secretary. 

“We have been asked to submit a report on the modality and practice of getting a strategic or management partner,” said Nepal. “As NAC has been expanding its fleet, it needs proficient management to translate current challenges into opportunities.”

Following the acquisition of two Airbus A320s in 2015, the national flag carrier is all set to induct two more aircraft, long-range A330, into its fleet. With the acquisition of these wide-body jets, its loan amount is expected to reach Rs40 billion. 

NAC has long been facing criticism for its failure to assure quality and efficiency. The government’s budget statement for the current fiscal year has also envisaged getting a strategic partner for the national flag carrier to improve its overall performance and management.

The government has been considering privatizing NAC or bringing in a strategic partner for the last decade. In 2007, it initiated a plan to hand over NAC’s management to a foreign strategic partner so that it could reform and rescue the troubled carrier. However, the plan fell apart.

In 1970, the then Royal Nepal Airlines Corporation (RNAC) had invited experts from Air France under a programme to improve management, and they handled most of the managerial positions until 1973. In 1972, RNAC acquired its first jet, a Boeing 727, in cooperation with the French carrier.

The Finance Ministry has on different occasions informed the Tourism Ministry to induct strategic partners to improve the state-owned company’s overall system performance.

In September 2015, 21 foreign firms including Lufthansa Consulting and Airbus had submitted letters of intent (LoI) to provide world class management consultancy services to NAC. The carrier had asked for LoIs to improve its overall system performance by inducting a management consultancy service provider in the first phase, and handing over management in the second phase.

Under the proposal, NAC had planned to conduct a gap analysis to identify its shortcomings. The gap analysis period will last a month and NAC will have to pay a fee of 295,000 euros for the service.

In the second phase, the company will take over NAC’s management. It will appoint its own people to top management posts like chief executive officer, chief financial officer and chief marketing officer. However, the plan fell apart after the Finance Ministry showed reluctance to fund the project.

“We will also review the proposals of Lufthansa Consulting, Airbus and other companies before producing the report,” said Nepal. According to him, it will take at least two weeks to prepare the report.