In July 2020, Nepal Airlines stopped operations of all of its Chinese aircraft. This included two Xian MA60s and four Harbin Y12s. Nepal had acquired these aircrafts from China in 2014. The Nepali airlines claimed it could not afford to fly the aircraft, and thus these planes were grounded until further notice.
In November 2011, when the sale for the aircrafts began, technical teams from both Bangladesh and Nepal had visited China to inspect the MA60s and Y12s. While Bangladesh had deemed the aircraft “not suitable”, Nepal went ahead and signed an agreement with Aviation Industry Corporation of China (AVIC) to procure six aircrafts. It appears Nepal was forced to acquire the aircraft. The Kathmandu Post had then reported that the “Chinese government said Nepal would have to buy a number of aircraft if it wanted some for free.” The deal took place in 2012. As a result, China gifted one MA60 and one Y12 to Nepal Airlines two years later.
The planes in question, however, did not prove to be beneficial for Nepal and turned out be a liability. A Nepal Airlines board member disclosed that this was the carrier’s worst decision. Moreover, the Y12 aircraft has long been questioned for its functionality and performance.
Nepal Airlines had bought these planes on loan. Since then, the carrier has been struggling to make payments, especially since these aircrafts have not been fully utilized. As per the deal, the Nepali government has to pay to the Chinese side an annual interest rate of 1.5% and a service charge and management expenses amounting to 0.4% of the overall loan amount taken by the Ministry of Finance. The ministry then charges the Nepali carrier 8% annual interest on the amount of the disbursed loan.
The warranty period of these aircrafts expired this year and they are still grounded. Though China sold these aircrafts to Nepal nine years ago, it did not bother to help Nepal in capacity building to operate these aircrafts. The Nepal Airlines are still short of trained crew/engineers, technical support to carry out major maintenance work on these aircrafts. It needs spare parts and Life Limited Parts for at least three years to ensure smooth running of these planes.
Meanwhile, Aviation Industry Corporation of China (AVIC) has reportedly given notice to Nepal Airlines Corporation (NAC) to pay all the debts accrued on purchase of spare parts, training, tech support and instrument purchase/installation before NAC even starts to think about re-operating these aircrafts.
China is known to supply sub-standard equipment that requires heavy maintenance charges. The sales of these equipment are meant to benefit only Chinese companies. Absence of knowledge and technology transfer by China to recipient countries renders them vulnerable. Serious questions have been raised about operational capability, durability, post-sales service and maintenance of Chinese equipments. They have only turned out to be ‘White Elephants’ for recipient countries.