Nepal’s civil aviation body has not been able to pass its annual budget even three months into the new fiscal year which, officials say, may compound problems such as weaknesses in revenue forecasting and management and project execution.

A delayed annual financial plan also prevents government entities from initiating procurement processes at the start of the fiscal year and making systematic cash release plans.

According to officials at the Civil Aviation Authority of Nepal, which has been performing a dual role of civil aviation regulator and service provider, passage of the budget was initially delayed because newly installed Prime Minister Sher Bahadur Deuba failed to expand his Cabinet for nearly three months after being sworn in.

On October 8, Deuba named Prem Bahadur Ale as minister for culture, tourism and civil aviation. “Two weeks have passed since the appointment, but the new minister is holding back approving the budget,” said a civil aviation official.

“The new minister wants to review the budget. And the plan may be delayed further.”

The tourism minister chairs the board of the Civil Aviation Authority of Nepal.

Raj Kumar Chhetri, acting director general of the Civil Aviation Authority of Nepal, told the Post that they had tentatively finalised the date of the board meeting. The board may meet on October 25 to pass the budget if things go as planned, he said.

The Civil Aviation Authority of Nepal has proposed a bloated annual budget of Rs41.50 billion for this fiscal year 2021-22, ending mid-July 2022, betting on a rebound in the travel market and increased revenues as the vaccination drive picks up pace.

This year's budget is slightly higher than last year's which amounted to Rs41.11 billion.

According to the civil aviation agency, this year the annual budget was slightly higher because of the plan to complete the two under-construction international airports in Pokhara and Bhairahawa by this fiscal year.

While the facility in Bhairahawa has reached the testing phase, the Pokhara airport project has been given one more year to complete the construction. It is expected to be ready by July 10, 2022, before the current fiscal year ends, under the revised completion period.

Though the domestic airline industry has returned to normal, demand for international travel has not rebounded despite Nepal having thrown its door wide open, waiving quarantine requirements and allowing vaccinated tourists to visit the country.

On September 23, Nepal threw away the seven-day quarantine requirement and resumed issuing on-arrival visas to all vaccinated foreign travellers in a bid to bring its virus-ravaged tourism industry back to life.

Visitors should have received their last dose of the Covid-19 vaccine at least 14 full days prior to entering Nepal. Those who are not vaccinated or partially vaccinated will not get on-arrival visas. They have to get their entry permits from Nepali diplomatic missions, and also spend 10 days in quarantine in government-listed hotels.

In September, there were 265 domestic flight movements on average daily at Kathmandu’s airport, according to Tribhuvan International Airport statistics. The number of daily flyers has reached 13,000, which is the same as pre-Covid levels.

In the international sector, there were 30 flight movements on average daily with nearly 5,000 flyers. The number of flights and passenger movement is down by more than half compared to pre-Covid figures.

The civil aviation body’s revenue has also seen dramatic declines.

In the previous fiscal year 2018-19, the Civil Aviation Authority of Nepal earned revenues totalling Rs9 billion. In the last fiscal year 2019-20, income plunged 43 percent to Rs4.50 billion.

The airport had anticipated revenues to climb to Rs10.50 billion in 2019-20 following the launch of the Visit Nepal 2020 promotional campaign and resultant higher passenger traffic. But Covid-19 came and disaster followed.

In 2020-21, the coronavirus situation went from bad to worse. Consequently, the authority made a downward revision of its projected revenue to rock bottom at Rs2.67 billion. But it succeeded in collecting Rs2.95 billion.

The authority reported that Nepal’s civil aviation industry suffered losses amounting to Rs37 billion from the time the first lockdown in March 2020 until the second lockdown in April 2021.

According to Chhetri, the construction of new terminals in Biratnagar and Nepalgunj airports, and the reopening of Mahendranagar Airport, the main tourist gateway to Shuklaphanta National Park, are the key projects for this fiscal year.

“Many plans have been put on hold due to Covid-19 as funding sources have dried up,” said Chhetri.

The largest portion of the authority’s income comes from passenger fees and landing and parking charges for aeroplanes.

Airport development tax, passenger service charge, and parking and navigation charges account for the major earnings of the airport.