For more than 15 years, Nepal has promised the world that it would reform its aviation sector. Fifteen tourism ministers have come and gone. Draft laws have been prepared, revised, endorsed, withdrawn and reintroduced. Yet one of the most critical reforms demanded by international aviation watchdogs—the separation of Nepal’s civil aviation regulator from its service provider—remains unfinished.

The consequence is visible on the international stage. More than a decade after the European Commission blacklisted Nepali airlines over safety concerns, Nepal remains on the European Union’s air safety list. The designation prevents its carriers from flying to Europe and casts a long shadow over the country's tourism image.

On June 9, the European Commission published its latest update to the EU Air Safety List. After 13 years, it still keeps Nepali airlines in its bad books citing the absence of meaningful progress in aviation governance and safety reforms.

Now, the newly formed government led by Balendra Shah has once again pledged to accomplish what successive administrations failed to do. Through the budget announced on May 29, the government committed to splitting the Civil Aviation Authority of Nepal (CAAN) by mid-January 2027, setting a concrete deadline for the first time for a reform that has languished in political limbo for years.

Whether this promise becomes reality remains the defining question for Nepal’s aviation sector.

The proposed reform would divide CAAN into two separate entities—a regulator responsible for oversight and safety compliance, and a service provider responsible for airport operations and air navigation services. International aviation bodies have long argued that combining both functions under one institution creates an inherent conflict of interest, as the same organisation effectively regulates itself.

Officials at the Ministry of Culture, Tourism and Civil Aviation insist that this time the process is moving forward.

“We are working on the civil aviation bills internally,” said Indu Ghimire, joint secretary at the ministry.

“We have planned to send the draft bills to the law and finance ministries once the internal assessment is complete. We are on track to meet the mid-January deadline,” she added.

The Civil Aviation Authority of Nepal Bill and the Air Service Authority of Nepal Bill form the backbone of the proposed restructuring. Together, they seek to establish a clear separation between regulation and operations, a model followed by most countries with robust aviation safety systems.

Yet the history of these bills reflects Nepal’s chronic inability to implement reforms despite repeated commitments.

The first push for separation dates back to 2010, when Nepal signed a financial agreement with the Asian Development Bank under the Air Transport Capacity Enhancement Project. A Spanish consultancy, INECO, funded through the project, prepared the first draft legislation in 2014 at a cost of $4.2 million.

Since then, the bills have travelled a long and frustrating political journey.

In February 2020, the proposed legislation was registered in Parliament. In August 2021, the National Assembly unanimously endorsed both bills. They were subsequently scheduled for discussion in the House of Representatives in March 2022.

However, on the very day they were due to be debated, then tourism minister Prem Bahadur Ale requested that Parliament hold them back, citing objections from employees within CAAN who opposed the bifurcation of the organisation.

Two weeks later, Parliament was prorogued, effectively burying the bills.

Following the 2022 general elections, the legislation was returned to the ministry. Another attempt was made under subsequent governments, but the bills once again stalled amid political transitions and competing priorities.

In February last year, then tourism minister Badri Prasad Pandey re-registered the bills in the lower house. Parliamentary committees proposed substantial amendments. Before the process could move ahead, political instability and the rise of the Gen Z-led protest movement contributed to broader government turmoil, and the legislation once again failed to advance.

Today, the bills are back at the ministry for review.

According to officials, concerns raised by employees and stakeholders are being incorporated into the latest version before it is sent back for inter-ministerial consultations.

The repeated delays have frustrated not only international partners but also Nepal’s tourism and aviation industries.

Nepal's aviation sector has long been dogged by allegations of corruption, political interference, weak oversight, and institutional conflicts of interest. While not every accident or safety problem can be attributed to corruption, governance failures have repeatedly undermined reform efforts and damaged Nepal's international aviation reputation.

The leadership of CAAN has often been influenced by political considerations. Governments have changed frequently, and appointments to key aviation positions have reflected political loyalty rather than technical expertise.

The result has been policy discontinuity, with each new minister promising reform while few initiatives survive political transitions.

Perhaps the clearest example of governance failure is the repeated stalling of aviation reform bills.

The legislation to split CAAN has circulated through governments and Parliament for more than a decade. Bills have been passed, withdrawn, reintroduced, and delayed despite repeated commitments to the European Union and the International Civil Aviation Organisation.

Nepali Congress leader Udaya Shumsher Rana, a former lawmaker, has been among the most vocal advocates of aviation safety reform.

Following major air accidents, Rana publicly urged Parliament to fast-track the two aviation bills, stating that CAAN "urgently needs to split" into a service provider and a regulator.

In 2024, he alleged that an "invisible hand" was blocking the passage of the aviation bills, saying former tourism ministers had informed parliamentary committees that efforts to advance the legislation had faced resistance. He suggested powerful interests were preventing reform.

Rana has linked the CAAN split directly to Nepal's efforts to get off the European Union air safety list, arguing that failure to separate the regulator from the service provider has been one of the major obstacles to convincing European authorities that Nepal has addressed systemic safety concerns.

“We hope the new government is well aware of it and the process won't be delayed now.”

Industry insiders have often alleged that bureaucratic interests, employee groups, and political actors have resisted reforms because the existing structure concentrates power and control over significant financial resources.

Industry insiders argue that aviation safety reforms have become even more urgent as Nepal seeks to attract higher-end tourists and international investment. The arrival of globally recognised hotel brands and efforts to reposition Nepal as a premium tourism destination require a credible aviation system capable of inspiring confidence among travellers.

“Obviously, it is difficult to quantify exactly what Nepal has lost since being placed on the European Commission’s air safety list, but the losses have been significant, particularly for tourism growth and Nepal Airlines,” said Birendra Bahadur Basnet, executive chairman of Buddha Air, Nepal’s largest private airline.

“The ban effectively halted the possibility of Nepali airlines operating in European destinations and discouraged airlines from EU member states from expanding services to Nepal. It may also have deterred high-end tourists from visiting the country and limited the prospects of fully utilising the new international airport in Bhairahawa,” he said.

“There are many direct and indirect impacts that require a proper assessment, all stemming from the prolonged delay in aviation reforms.”

Basnet said the new government appears serious about implementing the commitments outlined in the budget, which includes a clear timeline for reform. However, he stressed that the success of the safety oversight system would ultimately depend on how independent and autonomous the new regulatory body is once the legislation is enacted.

“The effectiveness of the reform will be determined by the degree of autonomy granted to the regulator after the laws are formulated,” he said.

Besides the economy, Nepal’s aviation industry faces a serious credibility problem.

Despite improvements in infrastructure and training over the years, safety concerns have persisted. Even after the Covid pandemic, Nepal has experienced eight aircraft accidents, six of them fatal, resulting in more than 100 deaths.

As a result, international aviation watchdogs continue to closely monitor developments in Nepal.

For international observers, the issue extends beyond legislation.

During a meeting with journalists in Kathmandu in May, European Union Ambassador Veronique Lorenzo noted that nearly every Nepali minister she had met had pledged commitment to aviation reform.

“Every single minister in Nepal has worked towards that direction,” she said. “We hope there will be some progress in the future.”

Lorenzo clarified that the EU has never insisted on a particular legislative framework.

“We never urged for change in legislation. We had only urged for independent functioning to end the conflict of interest,” she had said.

Her comments pointed to a central frustration among Nepal’s international partners: commitments have been abundant, but implementation has remained elusive.

The issue was also raised during the 15th Nepal-European Union Joint Commission meeting held in Kathmandu on March 19, 2024, where both sides identified air safety as a priority area in bilateral relations.

European officials have consistently stressed that aviation safety is ultimately about protecting lives.

In 2023, Paola Pampaloni, deputy managing director for Asia and the Pacific at the European External Action Service, described air safety as a “fundamental” issue.

“Passengers should be protected,” she said. “Whether they are the EU or the Nepali people, our priority is the safety of the people.”

The EU imposed its blanket ban on Nepali airlines in December 2013 following a series of fatal accidents, including the crash of Sita Air Flight 601 in September 2012 shortly after take-off from Kathmandu. Nineteen people died in the accident, including seven British nationals.

The tragedy reinforced concerns about Nepal’s aviation oversight. Between 2008 and 2012, the country recorded at least two air crashes every year.

Successive governments have assured global aviation forums, including the International Civil Aviation Organization (ICAO), that institutional reforms would be implemented. Yet the promises have repeatedly collided with domestic politics, bureaucratic resistance and vested interests.

“The coming months may therefore determine whether Nepal finally breaks the cycle,” said Basnet.

“The mid-January target is possible. If it fails again, the country risks reinforcing a reputation for making promises it cannot keep.”