The Aviation Industry Corporation of China (AVIC) has declined a request by Nepal Airlines (RA, Kathmandu) to take back five disused Chinese-manufactured aircraft. The Kathmandu Post reports the request was made at a December 2024 meeting, but state-owned AVIC demurred, suggesting that the airline instead explore alternatives.
Nepal Airlines acquired four Y12Es and two MA-60s last decade in a Chinese government-facilitated deal that saw two of the aircraft gifted to the carrier and four provided via soft loan terms. Nepal Airlines briefly operated the aircraft before declaring them unsuitable for its requirements and grounding them in 2020.
The aircraft (now down to five after one Y12 was written off after a runway incident) remain parked at Kathmandu, "visibly rotting" according to the newspaper, costing the cash-strapped airline NPR200 million rupees (USD1.47 million) annually in insurance and parking fees. At the December 2024 meeting, Nepal Airlines' chairman, Ubaraj Adhikari, reportedly asked AVIC to take the aircraft off his hands as a goodwill gesture.
The aerospace and defence conglomerate refused but said it would help Nepal Airlines sell or dispose of the aircraft by other means - as long as the airline clears its overdue invoices for technical support and spare parts, which Nepal Airlines has reportedly agreed to do.
Previous efforts of Nepal Airlines to sell, lease, or otherwise get rid of the aircraft have fallen flat. Sales campaigns in 2022 and 2023 attracted no serious interest. The newspaper suggests the airline is unenthusiastic about going through the process again. However, AVIC suggests a fresh campaign could attract buyer interest out of China. Alternatively, it suggested the carrier could hand them over to domestic entities such as the Nepal Army Air Wing or the Civil Aviation Authority of Nepal. But AVIC did not say what either entity would do with the five aircraft that need a lot of refurbishment work before they can fly again.
Nepal Airlines has again asked the Ministry of Finance for "guidance on the next steps." Nepal may also again take up the matter directly with the Chinese government.
Since the aircraft were grounded five years ago, despite voicing support, China has been reluctant to allow Nepal Airlines to divest them, primarily because doing so might reflect poorly on the aircraft types and their manufacturers.
A seven-year holiday on interest and principal repayments on the NPR3.72 billion (USD27.3 million) loan ended in 2021. In 2023, ch-aviation reported that no payments had been made but that the Chinese were not pressing the matter. Interest now continues to accrue, albeit at concessional rates.
