For five years now, five Chinese aircraft belonging to the state-owned Nepal Airlines Corporation (NAC) have been sitting idle on the tarmac of Kathmandu's Tribhuvan International Airport. The aircraft—two MA60s and three Y12Es—were brought to Nepal with great diplomatic effort in an agreement backed by China. But the cooperation, hailed as progress, quickly became a costly burden for the already financially struggling airline.
The acquisition of the six Chinese aircraft, originally four Y12Es and two MA60s, took place between 2014 and 2018 as part of an intergovernmental agreement between Nepal and the People's Republic of China. Two of the aircraft were gifted to Nepal Airlines, and the other four were financed with a low-interest loan from the Chinese government. The Aviation Industry Corporation of China (AVIC), a state-owned defense and aerospace conglomerate with extensive global interests, was the lead partner.
At the time, the cooperation was seen in Nepal as a strategic step to reduce its heavy dependence on Western aviation technology while simultaneously deepening bilateral relations with China. But the euphoria was short-lived.
Technical problems and operational hurdles
Shortly after commencing operations, it became apparent that the aircraft were not suited to the challenging terrain of Nepal. The MA60 models were considered difficult to control, especially when landing on short, high-altitude runways. Spare parts were difficult to obtain, and trained personnel for maintenance and operation were also lacking. The Y12E, intended as smaller regional aircraft, suffered from similar problems.
After one of the Y12Es was severely damaged in a runway incident, the airline decided to completely retire the fleet in 2020. Since then, five of the aircraft have been sitting idle in Kathmandu. They require extensive maintenance, even when not flying, to meet safety requirements.
Annual burden of millions
According to Nepal Airlines, the annual cost of storing the aircraft is approximately 200 million Nepalese rupees, equivalent to approximately 1,47 million US dollars. This sum consists of parking fees, insurance costs, and maintenance expenses. For an airline already facing losses, this represents a significant financial burden.
The NAC management has attempted several times in recent years to sell, lease, or even return the aircraft. Tenders for 2022 and 2023 failed to generate any response, despite evaluations of the aircraft by international aviation consultants. The minimum selling price set by Nepal was approximately USD 19,6 million—a price that no interested party was willing to pay.
In December 2024, Nepal Airlines CEO Ubaraj Adhikari entered into direct dialogue with AVIC representatives. During a meeting, he requested that the Chinese side take back the aircraft as a sign of good cooperation. However, the Chinese counterparts rejected this proposal. They only agreed to assist with the sale or reuse by third parties – but only on the condition that Nepal Airlines first settle outstanding invoices for spare parts and technical assistance.
China's hesitant attitude
Apparently, there is little interest on the Chinese side in making an official withdrawal public. Such a gesture could be interpreted as an admission that Chinese aircraft models are not successful on the international market. The MA60, for example, has already received a bad reputation in several countries, primarily due to safety concerns and a lack of spare parts.
Beijing is therefore remaining conspicuously reserved. Despite repeated diplomatic inquiries from Kathmandu – including at the Foreign Ministry level – the Chinese government has remained vague. While it has signaled a willingness to cooperate, concrete offers or solutions have so far been lacking.
The aircraft were largely financed through a soft loan of 3,72 billion Nepalese rupees (approximately 27,3 million US dollars). The agreement provided for a seven-year grace period, which ended in 2021. Interest payments have been accruing since then. According to information, no payments have been made to date. However, the Chinese side has not actively demanded this—possibly to avoid further straining diplomatic relations.
Possible alternatives to decommissioning
AVIC suggested that Nepal Airlines transfer the aircraft to government institutions within Nepal—such as the Air Force or the Civil Aviation Authority. It was also suggested launching a new sales campaign, possibly focusing on smaller Chinese airlines. However, it is questionable whether there is actually a market for the aircraft. Their condition is deteriorating, and reactivating them would be costly.
Nepal Airlines' leadership appears increasingly disillusioned. This is not the first time that an ambitious procurement without a thorough needs analysis has turned into a long-term loss. The current leadership has again asked the Ministry of Finance for "direction"—a diplomatically worded request for political support, including the involvement of the Prime Minister if necessary.
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