Nepal crisis grounds flights, business

King declares 3-year emergency; telecom links cut.

Indian Airlines, Jet Airways and Air Sahara on Tuesday suspended operations to Kathmandu indefinitely as Nepal's King Gyanendra declared a state of emergency for three years and sacked Prime Minister Sher Bahadur Deuba.

"The present situation does not permit operation of flights as the air traffic controller (ATC) at Kathmandu is not giving permission to land. Once the situation changes, we will resume operations," said Civil Aviation Minister Praful Patel.

The three Indian carriers operate three daily flights to Kathmandu. An Air Sahara flight took off from Delhi in the morning but returned after hovering over the Kathmandu airport as it was not given permission to land by the ATC.

Indian Airlines sources said their carrier was on a "stand-by" as the airline's Kathmandu office had not given clearance to its flights till afternoon.

The development could cost the three companies a revenue loss of up to Rs 42 lakh a day. Together, these airlines fly some 1,000 seats on the sector daily, and a Delhi-Kathmandu ticket is priced at Rs 4,200. Most of these airlines were reporting very high occupancy on the route.

Meanwhile, Indian companies with interests in Nepal tried to get in touch with their employees there but all their efforts turned out to be futile as the Nepalese authorities cut off all telecommunication links.

PepsiCo India, which oversees the bottling operations run by the Jaipuria group in Nepal, said it had lost all contact with the franchisee.

Hindustan Lever Ltd and Dabur India Ltd, too, could not make contact with their Nepalese subsidiaries, Unilever Nepal and Dabur Nepal. But Coca-cola India claimed it was in touch with its employees in Nepal.

Some of these companies said today's development would not impact their business in the Himalayan kingdom. "We don't think it will impact our business. But we are watching the situation closely and will asses the impact before taking any decision," a Dabur India executive said.

But others were not so optimistic. The Videocon Group, which has a manufacturing facility outside Kathmandu that can produce 20,000 colour televisions per annum, shut it in September last year following the Maoist uprising.

"We do not intend to resume operations in the near future," VN. Dhoot, chairman, Videocon Group, told Business Standard. Indian business interests in Nepal are estimated at around $200 million.