Nepal Airlines Corporation (NAC), the national flag carrier, has requested Rs 8 billion from the government to repair four aircraft engines, urging policy reforms to ease procurement complexities.
Janakraj Kalaheti, the Acting General Manager of NAC, presented this appeal to the International Relations and Tourism Committee under the House of Representatives, the lower house of parliament, on Friday, October 2, 2026. Kalaheti stated that existing legal provisions related to bid bonds, performance bonds, and advance payments are severely affecting engine maintenance and procurement processes.
NAC recently incurred an estimated revenue loss of Rs 240 million when one of its widebody aircraft was grounded due to technical issues, affecting six flights to Japan. Another widebody aircraft undergoing maintenance in Italy has also encountered additional technical complexities. NAC is currently attempting to operate the aircraft by leasing parts to address these problems.
Kalaheti also highlighted the urgent need for a decision regarding the sale, lease, or other management of the MA-60 and Y-12 Chinese aircraft, which have not been commercially viable. These aircraft were removed from service on July 16, 2020, due to poor performance and high operating costs. NAC had planned to auction these aircraft in December 2023.
Kalaheti emphasized that the airline’s challenges should not be viewed solely through a profit-loss lens, stressing the necessity of fleet expansion and modernization to compete internationally. He also noted NAC’s obligation to continue serving remote areas of Nepal.
Background to NAC’s Challenges
Janakraj Kalaheti was appointed Acting General Manager of NAC on Bhadra 19, 2083 (September 4, 2026). The International Relations and Tourism Committee is chaired by Sumnima Udas, who was elected on Baisakh 4, 2083 (April 17, 2026). Dolprasad Aryal is the current Speaker of the House of Representatives.
NAC acquired two MA-60 and four Y-12 aircraft from China under a bilateral agreement in November/December 2013, with two received as grants and four on concessional loans. The first MA-60 arrived in April/May 2014, and the first Y-12 in October/November 2014.
An Auditor General’s report previously flagged NAC for violating the Public Procurement Act, 2063, in the purchase of widebody aircraft, specifically mentioning the A330-200 brand and procurement through a third party.
Both of NAC’s widebody aircraft were grounded until September 14, 2026, impacting daily revenue by Rs 30 million. One of NAC’s widebody A-330 aircraft (callsign N-ALY) returned to Kathmandu on October 2, 2026, after a detailed C-check in Italy, having departed for maintenance on June 22, 2026. Another widebody is also in Italy for a C-check.
Future Steps and Unanswered Questions
NAC awaits the government’s response regarding policy facilitation for the Rs 8 billion engine maintenance. The corporation also needs to finalize plans for the Chinese aircraft. Separately, NAC had issued an international tender on October 22, 2023, to purchase three narrowbody aircraft for domestic flights, but the selection process was delayed as of March 22, 2024, due to technical reasons.
The specific legal provisions causing issues with bid bonds, performance bonds, and advance payments remain unclear. The exact nature of the “additional technical complexities” affecting the aircraft in Italy has not been detailed. The government’s immediate reaction or timeline for policy facilitation regarding the Rs 8 billion request is also unknown.
