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Will the grounded Chinese fleet in Nepal have any takers?

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Will the grounded Chinese fleet in Nepal have any takers?

Nepal Airlines has released a dry-lease notice for leasing its grounded fleet of five 17-seater Y12E and 56-seater MA60 Chinese aircraft. The final date for submission of the sealed proposals for lease-out of these aircraft is on or before October 31, 2022.  Along with the aircraft, Nepal Airlines is also offering a wide array of spare parts and tools.

After more than two years of grounding, the national carrier of Nepal has decided to lease out the aircraft to national and international operators with a valid air operator certificate. Since Nepal Airlines brought the Chinese aircraft on board, they have pushed the airline deeper into an economic crisis. The Chinese turboprops were bought due to a deal between the Governments of Nepal and China to serve the dangerous mountainous terrains of Nepal, but the aircraft fell short in terms of performance. In fact, the aircraft didn’t suit the Nepal topography at all. To top it all, a lack of skilled pilots to fly and maintain the fleet and lack of spares added to the airline woes.

Currently, three Y12Es and two MA60s are in storage at the remote parking at Tribhuvan International Airport. Corrosion has started appearing on the metal surfaces and components of the parked aircraft compromising the structural integrity of metal aircraft.

In March 2020, one of the Y12E suffered a mishap due to loss of power in one engine and made a hard landing. Luckily there were no human casualties but the aircraft suffered irreparable damage leading to the grounding of the Chinese fleet altogether.

In March 2021, the Finance Ministry of Nepal gave permission to lease out or sell the aircraft but, due to a change in the political scenario, Nepal airlines was asked to reactivate the MA-60s and Y12Es. Failure to re-engage the fleet again led to a reversal in the decision by the top management in 2022. Now, if Nepal Airlines doesn’t find any takers for the dry-lease offer, it plans to sell the aircraft.

Nepal Airlines is currently in a deep financial crisis having taken out loans to buy the aircraft. The airline has been defaulting on other loans pushing it into deeper financial difficulty.

"We haven’t paid the installments nor the interest to the government as we have grounded the Chinese planes. The Finance Ministry has directed us to manage the planes, so we have decided to lease them all,” the airline said in a statement.

Nepal Airlines hopes to find takers for the grounded Chinese fleet as a mild relief from the financial debt.