Nepal Airlines Corporation (NAC) and European aircraft manufacturer, Airbus, finally signed a revised Memorandum of Understanding (MoU) today, after over three years.
"NAC signed a revised Memorandum of Understanding with Airbus today to buy two narrow-body A320-200 aircraft," said a high ranking official at the national flag carrier.
"Airbus will deliver both the aircraft by 2015, one in February and the other is March ," he said, adding that the aircraft manufacturer will charge manufacturing escalation price — according to the price of delivery time — though the base price will remain similar to that of 2008, when the two had agreed to sign an agreement.
Though, the NAC board, on October 26, 2009, had decided to purchase one narrow-body A320-200 and one wide-body A330-200 aircraft from Airbus, the earlier government had directed it to buy two narrow-body aircraft from Airbus.
The process was halted after the NAC decision ran into trouble as the Public Accounts Committee (PAC) directed NAC to cancel the agreement.
Airbus had quoted $41.28 million for an A320-200 aircraft and $92.84 million for an A330-200 aircraft, on November 6, 2009.
Earlier, on February 13, the cabinet had directed the ailing NAC to revive the shelved agreement with Airbus to purchase two narrow-body aircraft, after the Supreme Court’s decision on April 24, 2012, to cancel the purchase decision of PAC.
The PAC decision of December 28, 2009, was an absolute interference in Nepal Airlines’ internal matters and it does not hold any legal base, according to the Supreme Court verdict that has cleared the way for the Ministry of Culture, Tourism and Civil Aviation to remove all the legal hurdles to allow NAC revive the old deal with Airbus.
Yesterday, the government gave NAC a guarantee for the purchase of two aircraft from Airbus for NAC that is fast losing its market due to lack of aircraft.
After the signing of the revised memorandum of understanding by general manager Madan Kharel and director of Corporate Department of NAC Ganesh Bahadur Chand, and senior sales director Sheel Shukla and sales contacts director of Airbus Rob Garden on behalf of their respective organisations here today, NAC could expand its market share that has been squeezing in recent years.
Started on July 1, 1958, as Royal Nepal Airlines Corporation, the current NAC has been left with two age-old Boeings for international operations.
The airlines has a huge army of staff but is currently operating only two 20-year old Boeings and four Twin Otters — though it had seven Twin Otters and one Avro at one point in time — which has increased its operation cost.