The Cabinet on Friday gave its approval for temporary relaxation of civil aviation rules, which will enable new and existing domestic carriers to start international operations sooner. The move is aimed at increasing domestic airlines’ market share in the foreign routes.

The amendment to the guidelines to obtain international flying licence was tabled at the Cabinet by the Tourism Ministry last July, following applications from a number of prospective operators planning to fly on international routes.

The revised guidelines have scraped a requirement that mandated airlines to have five years of domestic operations to be eligible to fly overseas. However, one rule that has not been changed is that the airline will have to have three aircraft if they wish to fly overseas.

According to Tourism Ministry officials, after the approval of the guidelines, a 45-day notice will be issued inviting expressions of interest from prospective domestic airlines.

At least two passenger airlines and a cargo carrier will be granted licences after assessing their eligibility and required criteria, said Buddhi Sagar Lamichhane, joint secretary at the ministry.

The move was initiated after Shree Airlines along with other airlines applied to start international services.

Under the guidelines, the ministry has amended the categories of international licences and revised the paid-up capital requirement to establish new airlines.

The ministry issues three categories of airline licences: A, B and C. Under the old rules, a Class A licence is granted to airlines whose flights last longer than three hours, Class B to airlines whose flights last three hours, and Class C to carriers operating flights lasting less than three hours.

Under the proposed new policy, however, licences will be issued based on the weight of the aircraft. The ministry has proposed Class A licences for carriers flying aircraft having a maximum take-off weight (MTOW) of more than 125 tonnes.

Class B licence will be issued to carriers flying aircraft with an MTOW of more than 40 tonnes, and a Class C licence will be issued to carriers flying aircraft with an MTOW of less than 40 tonnes.

Likewise, Class A airlines are required to have a paid-up capital of Rs1 billion, Class B Rs750 million and Class C Rs500 million, as per the revised terms of reference.

All new airlines are required to have at least three aircraft in their fleet. The airlines are required to increase their paid-up capital by Rs100 million for each aircraft they add to their fleet beyond the mandatory requirement of three aircraft, ministry officials said.

Moreover, prospective airlines will have to provide a security deposit of Rs750,000 which will be refunded after they begin operations.  

The proposed policy has set a licence fee of Rs5 million for scheduled passenger airlines, Rs3 million for cargo airlines and Rs2 million for helicopter services. The licence has to be renewed every three years by paying half of the licence fee, said ministry officials. Currently, airlines are required to renew their permits every two years.

The guidelines need to be reviewed every three years; but the government has not reviewed them since March 2010. The last time the government issued a licence to operate international flights was in 2011 to the now defunct BB Airways.

Civil Aviation Bill gets the go-ahead

The Cabinet has given in-principle approval for the Tourism Ministry to draft a new  Civil Aviation Bill that envisages splitting the Civil Aviation Authority of Nepal (Caan) into two entities—regulator and service provider. The government has been working on the new law for the last nine years.

Government spokesperson and Minister for Information and Communications Gokul Banskota said on Friday that the new law will break up Caan’s existing function as a service provider and regulator to facilitate stringent enforcement of safety measures.

Currently, Caan is functioning as both regulator and service provider from the same office, and there is no clear demarcation between its duties and organisational structure.

Once the bill is signed into law, it will supersede two existing laws—the Civil Aviation Act 1959 and Nepal Civil Aviation Authority Act 1996. As per the draft bill, Caan will continue to act as regulator while a separate Airport and Air Navigation Services will be set up to operate as service provider. (PR)