NAC Reform Committee proposed three suggestions for NAC reform

KATHMANDU, Oct 06:The expert team suggested three reform proposals for Nepal Airlines Corporation (NAC).

On Sunday, the 'Structural and Managerial Study and Recommendation Committee of NAC,' constituted under the coordination of former Governor Dipendra Bahadur Chhetri, delivered a report to Sudan Kirati, Minister of Culture, Tourism, and Civil Aviation, with three possibilities for the NAC's improvement.

To enhance the NAC, the team suggested that management reform be implemented in the status quo, that the NAC be changed into a company, and that the company be divided into three divisions.

According to the first alternative, the management contract should be negotiated through an international open call, allowing the NAC to remain a wholly owned government organization. To do this, a contract should be negotiated with a company with international airline experience that is currently in operation.

As a result, the company granted the contract should have complete autonomy in its day-to-day operations. This background will assist the NAC in developing a management contract-ready approach.

The NAC will have to be turned into a company with a strategic partner under the second option. It is currently proposed that the government of Nepal share 51 percent (23 from the Ministry of Finance and 25 from the Ministry of Tourism), 30 percent from the strategic partner, 15 percent from the organized organization, and 4 percent from the employees when establishing a company with a strategic partner.

According to this arrangement, a committee of seven members should be formed, with the Ministry of Culture, Tourism, and Civil Aviation as chairman of the board of directors, the Ministry of Finance as joint secretary, two strategic partners, one commerce faculty member from any university, one employee, and one expert from various fields as determined by the government.

The parent and holding company will provide professional aviation training, aircraft and related equipment maintenance, ground service operation, and catering and technical services to subsidiary enterprises as needed.

The International Flight Subsidiary Company will be able to operate and manage planes with complete autonomy. However, the parent company will continue to support the purchase and upkeep of the aircraft. It will be made up of three directors from the parent comapny as well as two aviation specialists.

Domestic flights will be managed by a separate comapny. The parent company will also provide technical, purchasing, and maintenance support in this case.

If the company is not included as a strategic partner, structural modifications should be implemented so that the government of Nepal has 51 percent ownership, according to the report. According to this, the Ministry of Finance will control 26% of the company, while the Ministry of Tourism would possess 25%.

Similarly, 15% of financial institutions/insurance businesses, 15% of the organized tourism sector, 4% of employees (former/current), and 15% of initial public offers (IPO) were highlighted.

The expert team recommended that the comapny expand its paid-up capital to 20 billion and manage the investment to gain a competitive edge.

The team also proposed expanding the number of flights to boost the NAC's revenue. The Nepal government has also proposed selling Soaltee Hotel shares to raise funds for this purpose. It has been suggested that the number of ships available for foreign flights be increased as well.

According to the suggestion report, the company will need to restructure its current debt and secure a loan with a subsidized interest rate with the assistance of the Nepalese government.