The government has been toying with the idea of allowing the private sector to operate Gautam Buddha Airport in Bhairahawa under a public-private-partnership (PPP) model.

Located in south central Nepal, the airport is the gateway to the international pilgrimage destination of Lumbini, the birthplace of Gautam Buddha. It is in the process of being upgraded to an international airport, and the project is expected to be completed by 2019.

Last week, stakeholders including officials of the Asian Development Bank, the project financier, got together at the National Planning Commission to discuss the possibility of involving private companies to run the airport.

The meeting decided to carry out a feasibility study to recommend options and study the parameters of the PPP policy, said Pramod Nepal, under-secretary of the Tourism Ministry. “However, it’s at an initial phase.”

A comprehensive operational readiness and airport transfer (ORAT) consulting service will be needed before opening the new airport infrastructure to the private sector, he said.

The service comprises concepts and standard operating procedures, training, human resources strategy and operational trials. After that, the airport can be awarded to a private operator through a competitive bidding process.

Government officials said that new laws would have to be passed to permit the private sector to manage an international airport in the country. The government will retain ownership of the assets.

The proposed Integrated Civil Aviation Bill 2017 has also envisaged allowing the private sector to build and operate airports. A draft of the new law looks kindly at potential privately operated airports, and it has also simplified the process for the government to privatize its existing airports.

There are examples in the developed world of successful airports in the public sector, such as Singapore, and in the private sector, such as London Heathrow.

What has made the government think that it is time to involve private players in airport operation and management? Many officials point to chaotic Tribhuvan International Airport (TIA) and its infrastructure hurdles as the inspiration to reach out to the private sector.

The government is under heavy pressure to improve the efficiency of its existing sole international airport that is managed by the Civil Aviation Authority of Nepal (Caan).

Besides being known as one of the worst airports in the world in terms of comfort, cleanliness and customer service, TIA has reached its capacity limit. Its infrastructure is ill-equipped to deal with the growth in the number of airlines. “There is an urgent need to bring the private sector onboard to operate the country’s airports,” they said.

The growth of Nepal’s air transport industry can be traced back to 1992 when the aviation policy was liberalized. Aircraft movement, both domestic and international, jumped more than fourfold from 24,600 in 1992 to 100,994 in 2016, according to TIA statistics.

Liberalization in Nepal’s aviation scene opened the door for private operators, and a swarm of airlines entered the Nepali skies. The aviation sector is flying high, but infrastructural hurdles persist, and the service offered by government-managed airports remains poor. 

Due to flip-flops in government policy, the country’s airport infrastructure and services have failed to match the pace of the booming airline industry.

The aviation industry has become very attractive for investors, but its potential remains constrained by limited infrastructure.

Recently, a study conducted by Caan found that the country’s domestic airports would not be able to accommodate more aircraft for at least two years. The study on ‘airport capacity declaration’ has recommended a complete halt in the issuance of new air operator’s certificate (AOC) until the airport infrastructure is upgraded.