High ATF price hits foreign airlines

Kathmandu, August 22

Foreign airline operators have been deterred from expanding their service to Nepal owing to the high cost of aviation fuel imposed by the government.

Representatives of foreign airline companies operating in the country, including Turkish Airlines, Etihad Airways, Qatar Airways and Malindo Air, have said the high cost of aviation turbine fuel in Nepal is making operation increasingly ‘infeasible’.

Moreover, the high ground handling charge at Tribhuvan International Airport and other charges levied by the TIA authority have dampened the allure of expanding service to Nepal, they said.

Nepal Oil Corporation charges foreign airlines refuelling at TIA $1,050 per kilolitre (almost $1,300 per tonne) of ATF. The rate is almost double the $750 per tonne charged in India, Bangladesh and Sri Lanka, according to airline companies.

“The price of ATF in Nepal is completely unacceptable and making our operation here infeasible,” said Abdullah Tuncer, general manager of Turkish Airlines. “Why will any airline company choose to promote its business in Nepal if its operation cost is almost double compared to other countries?”

The question could be a major setback for the government’s plan to promote tourism in Nepal, especially as it is gearing up for Visit Nepal 2020.

According to Tuncer, Turkish Airlines and other foreign airline companies are eager to increase flights to Nepal and support the tourism campaign, but issues related to fuel price and ground handling cost have been major deterrents.

Per flight ground handling charge for foreign airlines in Nepal is $6,000, compared to almost $3,000 in other countries. “This is also raising operation cost for foreign airlines in Nepal,” he added.

Representatives of Malindo Air and Etihad Airways, who did not wish to be identified, alleged that the Nepal government had adopted ‘take it or leave it’ policies for foreign airline companies. “We (foreign airline companies) have been raising the issues of high ATF price and ground handling charge for many years, but to no avail,” said the Malindo Air official. “We have no option other than to either comply or stop our services here.”

Interestingly, NOC stated that it had maintained high ATF price to cross-subsidise the loss in liquefied petroleum gas, petrol and diesel. “However, internal discussions are under way to revisit ATF price as fuel prices have come down in recent months,” informed Sushil Bhattarai, deputy executive director of NOC.

NOC is booking profit in all fuel products, including LPG, and its monthly profit has crossed Rs 2 billion.

Meanwhile, Minister for Culture, Tourism and Civil Aviation Yogesh Bhattarai acknowledged that high ATF price is a setback for the country’s tourism sector and is discouraging foreign airlines in Nepal. Bhattarai told THT that a committee will soon be formed to study the ATF price scenario in Nepal and other countries. “Based on the study report, the government will adjust the ATF price,” he added.

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