After a string of catastrophic mishaps, Makalu Air, which had shut down because of financial difficulties, is getting ready to relaunch under the new name Dāngfe Aviation Corporation Ltd. To obtain clearance, it must first resolve a number of regulatory ambiguities.
Background & Timeline
Name Change and Licence Renewal: Makalu Air’s operating license was renewed and its name changed to Dāngfe Air on 24 Magh 2080 (about early 2024) by the Civil Aviation Authority of Nepal (CAAN).
Makalu Air’s Previous Issues: When Makalu Air was first founded in 2009, it used three Surkhet-based aircraft to conduct domestic flights. Its Air Operator Certificate (AOC) was formally withdrawn in 2020 after being suspended in May 2018.
Accident History: The airline was permanently grounded after all three aircraft were engaged in cargo-flight incidents, including one at Talcha Airport in November 2011, another on April 8, 2016, and the final one in Simikot on May 16, 2018.
Present Situation: Documentation & Regulatory Obstacles
After completing the pre-application and application stages, Dāngfe Air is currently undergoing paperwork evaluation by the CAAN. It will only be permitted to import aircraft, finish technical assessments, and then start operating again under its new name after completing the final two phases.
Plan of Operations and Issues
Fleet Plan: According to the business plan, flights would be operated from Kathmandu to a number of locations, including the mountain regions, Nepalgunj, Surkhet, Pokhara, Biratnagar, Bhadrapur, Simra, Dhangadhi, Janakpur, Bharatpur, Bhairahawa, and Tumlingtar, using ATR aircraft.biznessnews.com
Capital Discrepancies: Only NPR 15 crore is currently issued, despite the plan listing a paid-up capital of NPR 25 crore. The discrepancy between this and the anticipated NPR 80 crore was noted by CAAN as not having a valid reason.
Timing of Fleet Expansion: Dāngfe’s feasibility assessment only contains three aircraft, despite regulations requiring the purchase of five within five years.biznessnews.com
Unrealistic Valuation: Dāngfe calculates that importing three ATRs will cost USD 25.5 million, even though its original paperwork stated that each aircraft would cost USD 12.5 million. No explanation for this disparity has been offered.
Lack of Financing Clarity: It is estimated that 80% of the NPR 397 crore project investment will be generated from banks. Nevertheless, the business has not provided financial institutions with any collateral information or even a letter of intent.
Doubtful Profit Margins: It has been questioned whether the forecast of a 38% gross profit under the current conditions is compatible with the aviation industry’s past performance in Nepal.
Founders & Shareholding Directors: Raju Kumar Shrestha (Lalitpur), Sanju Shrestha (Kathmandu-17), Abhishehman Shrestha (Kathmandu-15), and Sumana Kandel (Bharatpur-10) are the registered directors of the firm.
The capital at the time of the initial registration (as Makalu Air) was NPR 25 crore, which was divided between NPR 2.5 crore in working capital and NPR 22.5 crore in fixed assets. The following is how the shares, each worth NPR 100, were distributed:
- 500,000 shares of Raju Kumar Shrestha
- 350,000 shares of Sanju Shrestha
- 150,000 shares of Abhishehman Shrestha
- Sumana Kandel: half a million shares
In brief
After being grounded due to many incidents, Makalu Air is attempting to relaunch as Dāngfe Air with CAAN approval.
Although it has successfully completed the first regulatory processes, there are still a number of serious financial and procedural issues that need to be addressed, from imprecise collateral and ambitious profit projections to capital shortfalls and cost inconsistencies.
Before gaining full operational status, it must resolve these disparities in order to secure its future.