KATHMANDU, Oct 8: The government has registered two separate bills in the House of Representatives to end the dual role of the Civil Aviation Authority of Nepal (CAAN), separating its regulatory and service provider functions in an effort to improve management and safety in Nepal’s aviation sector.
The Ministry of Culture, Tourism and Civil Aviation has registered the “Civil Aviation Authority of Nepal Bill” and the “Nepal Air Service Authority Bill” at the Federal Parliament Secretariat. Tourism Minister Khadkaraj Poudel tabled the bills on behalf of the government.
If Parliament passes the bills, the existing CAAN will be dissolved and replaced by two autonomous bodies: The Civil Aviation Authority of Nepal as the regulator and the Nepal Air Service Authority as the service provider.
All existing CAAN employees will initially be transferred to the Air Service Authority. Employees wishing to join the regulatory authority will have to apply within 60 days after the legislation takes effect.
A major provision in the Air Service Authority Bill would, for the first time, formally open airport construction, operation and management to the private sector.
Under the proposed law, airports could be operated by private companies or through public private partnerships. The Nepal Air Service Authority would be authorized to operate and manage domestic and international airports on its own or in cooperation with private companies.
The provision would mark a departure from the current system, under which airports across Nepal are operated by the state. Private companies could also bring foreign investment into Nepal to develop, operate and manage additional airports.
Govt reintroduces bills to split CAAN, establish ASAN
Third attempt to split CAAN
Bills seeking to split CAAN have reached Parliament twice before but failed to become law after the House of Representatives was dissolved.
The first attempt came in 2017 and the second in 2024. The bills became inactive when the terms of the respective legislatures ended while they were still under consideration.
The latest bills represent the government’s third attempt to restructure CAAN. Their passage appears more likely this time because the government commands close to a two-thirds majority in Parliament.
The bills clearly divide responsibilities between the two proposed authorities.
The Civil Aviation Authority of Nepal would oversee aviation safety and regulation, licensing and certification, technical licensing, safety audits and enforcement.
It would issue Air Operator Certificates to airlines, register aircraft and certify their airworthiness. It would also issue licenses, ratings and competency certificates to pilots, air traffic controllers and engineers.
The regulator would have quasi-judicial authority to fine or suspend airlines and aviation organizations that violate safety standards.
The Nepal Air Service Authority, meanwhile, would handle airport operations, air navigation services, airport security and rescue services, as well as commercial activities.
It would be responsible for constructing, upgrading, maintaining, operating and managing domestic and international airports across the country. It would also provide air traffic control and communications services required for flight operations.
Its responsibilities would include navigation and aviation meteorological services, airport security management, firefighting, search and rescue operations, and collection of landing, parking, navigation and passenger service charges. The authority would also be able to commercially use airport infrastructure and facilities.
Minister Poudel said the Nepal Air Service Authority Bill, 2083 BS, had been introduced to establish a separate authority capable of developing aviation infrastructure and improving the quality and efficiency of air services.
Push to get Nepal off EU blacklist
Nepal’s aviation sector has remained on the European Union’s Air Safety List for about 13 years. Despite repeated government and diplomatic efforts, Nepal has not yet been removed from the list.
Nepal has been subject to the EU restrictions since 2013, preventing Nepali airlines, including national flag carrier Nepal Airlines Corporation, from operating in European airspace.
The European Union and the International Civil Aviation Organization have long raised concerns about the existing institutional structure in which CAAN both provides aviation services, including airport operations, and regulates and monitors those same services.
The government has cited this conflict of roles as a major reason for splitting CAAN into separate regulatory and service provider bodies.
Separating regulation from service delivery has been viewed as an important institutional reform for improving Nepal’s aviation safety oversight, strengthening the international credibility of Nepali carriers and supporting the country’s effort to get off the EU Air Safety List.
The Tourism Ministry expects implementation of the two laws to address a longstanding structural concern and strengthen Nepal’s case for removal from the EU restrictions.
