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Nepal’s civil aviation sector is at an important institutional crossroads. Preparations are underway to restructure the Civil Aviation Authority of Nepal into separate regulatory and service-provider institutions. After years of debate, the issue is no longer simply about reorganizing an institution. It concerns the future of aviation safety, airport development, service quality, institutional governance, and the state’s regulatory role.

The central question, therefore, should be: Are we actually building two capable institutions?

Dividing an institution is relatively straightforward. A law can change its name, offices can be separated, employees can be allocated, and assets and liabilities can be transferred. But these administrative steps alone do not constitute institutional reform.

If the new regulator retains the same weaknesses—external interference, unclear responsibilities, and inadequate regulatory capacity—the change in name will achieve little. Likewise, if the new service provider receives a new identity but remains subject to the same administrative controls, it may struggle to deliver the operational efficiency and professionalism expected from the restructuring.

The real purpose of restructuring should therefore be to clarify institutional roles, improve decision-making, and rebuild institutional capacity.

The regulator: An independent safety assurance institution

The regulator is not merely a rule-making body. In civil aviation, it is the state’s principal mechanism for assuring safety. Its fundamental responsibility is to ensure that airports, airlines, aircraft operations, air navigation services, and other aviation activities comply with prescribed safety standards.

Its functions should include rule and standard making, certification and licensing, inspection, surveillance, safety auditing, risk assessment, safety-data collection and analysis, regulatory enforcement, and implementation of the state’s civil aviation safety program.

However, regulatory authority alone is not enough. Regulatory decisions must be independent, impartial, and evidence-based.

Whether a service provider is state-owned or private, large or small, regulatory requirements should apply equally. An organization that provides a service should not also be responsible for regulating that service. Regulatory decisions should not be influenced by the provider’s financial interests, infrastructure investments, institutional influence, or political connections.

This raises a critical question: Once the regulator and service provider are legally separated, how independent will the regulator actually be?

If external influence continues to affect leadership appointments, budget allocation, human-resource management, or technical decisions, institutional separation will not achieve its intended purpose. Regulatory independence must therefore be embedded in the institution’s legal structure, governance arrangements, financing, leadership, and operating procedures.

The real strength of a regulator lies not simply in the extent of its statutory powers, but in its ability to make technically sound decisions free from undue pressure and vested interests.

The service provider: A professional corporation, not another authority

If the purpose of restructuring is to resolve the conflict between regulation and service delivery, creating another administrative “authority” as the service provider deserves careful consideration.

The regulator’s functions are fundamentally different from those of a service provider. The regulator establishes and enforces standards, certifies and licenses, inspects, monitors, and takes regulatory action. The service provider, by contrast, must operate airports and air navigation services safely and efficiently, develop infrastructure, expand capacity, mobilize investment, modernize technology, and maintain long-term financial sustainability.

These different functions require different institutional characteristics.

The service provider could therefore be developed as a government-owned corporation or company with adequate managerial and operational autonomy. Government ownership and government micromanagement are not the same thing. The state can retain ownership and responsibility for national policy and public interest while allowing professional management to make operational and commercial decisions.

For example, airport capacity expansion may require timely decisions on investment priorities, infrastructure development, equipment modernization, operational improvements, and service expansion. If such decisions remain subject to lengthy external administrative approvals, the new institution could reproduce the very structural weaknesses that restructuring is intended to address.

Autonomy, however, must not mean freedom from accountability. Managerial autonomy must be accompanied by performance obligations, financial discipline, transparency, and public accountability.

The central question is therefore not simply whether the state should retain ownership. It is how much managerial autonomy and how much results-based accountability should be given to the government-owned service provider.

Boards should be built on competence, not representation

The quality of a new institution will depend greatly on the quality of its board. Boards should not become formal assemblies of representatives from ministries and government agencies.

Their principal responsibilities should be to set strategic direction, ensure institutional governance, oversee major risks, ensure financial and institutional accountability, and evaluate executive leadership.

The regulator’s board should collectively possess expertise in civil aviation regulation, aviation safety, risk management, law, and institutional governance. The service provider’s board should have appropriate experience in airport operations, air navigation services, engineering and infrastructure, finance and investment, commercial management, information technology, and strategic management.

No individual Board member needs to be an expert in every field. What matters is that the board collectively possesses the expertise required by the institution.

Clear provisions on conflict of interest, declaration of interests, and recusal from conflicted decisions should also be established. Audit, safety, and risk committees can strengthen the board’s oversight function.

For the regulator in particular, the board should be structured to protect technical regulatory decisions from undue external influence. In this context, the proposed role of a political officeholder as chair of the regulatory board may merit reconsideration, not because of any individual’s qualifications, but because of the need to protect institutional regulatory independence.

Policy, oversight, and operations must be clearly separated

A sound governance principle is that the board should provide policy, strategic direction, and oversight, while executive leadership should be responsible for day-to-day operations and implementation.

The board should oversee strategy, major policies, risk management, financial discipline, safety governance, and executive performance. It should not directly intervene in routine administration, technical work, personnel deployment, or operational decisions.

At the same time, executives must be given the authority necessary to discharge their responsibilities. Holding an executive accountable without providing adequate authority is as ineffective as providing authority without demanding results.

The director general of the regulator and the chief executive of the service provider should therefore have clearly differentiated roles. The director general should serve as the regulator’s chief executive and technical leader, responsible for regulation, certification, inspection, safety surveillance, risk management, and regulatory performance.

The chief executive should be responsible for the service provider’s daily operations, infrastructure development, financial management, human resources, service quality, investment, and commercial development. Both positions should be filled through transparent, competitive, merit-based selection based on qualifications, experience, leadership capability, and demonstrated performance. 

Political policy and technical regulation

The government necessarily has an important role in civil aviation. It should determine national policy, sectoral priorities, and overall direction and establish the necessary legal and policy framework.

But policy direction and technical regulation are not the same thing. Whether an airport meets prescribed safety requirements, whether an airline or service provider qualifies for a certificate or licence, or whether an identified safety risk requires operational restrictions should be determined by the regulator on the basis of applicable law, approved safety standards, technical evidence, inspection findings, and risk assessment.

The government may establish policy priorities, but those priorities should not be used to influence technical regulatory decisions.

A clear institutional relationship is therefore required: the government sets policy; the regulator independently applies the standards; and the service provider operates in compliance with those standards. Without such a distinction, institutions may be legally separated while remaining functionally dependent. 

Safety continuity must come before institutional separation

The most sensitive stage of restructuring will be the transition period. Employees will change responsibilities. Assets and liabilities will be transferred. Existing contracts will require reassignment. Safety records and data will have to be transferred securely. Certificates and licences must remain valid and uninterrupted. Information systems and technical responsibilities must move to the new institutions without creating operational gaps.

Therefore, the first principle should be: “Safety continuity first, institutional separation second.” A dedicated transition management mechanism and a clearly time-bound transition plan are necessary. The plan should address not only personnel, assets, liabilities, and contracts, but also safety risks, certification continuity, safety data, information systems, technical staffing, and coordination between the two institutions.

The distinction between safety investigation, regulatory investigation, and criminal investigation should also be clearly maintained. Safety investigation seeks to identify causes and contributing factors and prevent recurrence. Regulatory investigation examines compliance with laws, regulations, and safety standards. Criminal investigation seeks evidence where a criminal offence may have occurred.

These functions should coordinate where necessary, but their purposes and institutional independence should not be merged. Safety information and lessons learned through safety investigations should be usable for safety improvement, while an environment should exist in which relevant safety information can be provided openly and appropriately protected.

People are the core of institutional capacity

The most difficult part of restructuring is not buildings, equipment, or offices. It is people. Technical knowledge, institutional memory, and professional experience accumulated over decades cannot simply be transferred through a personnel list. Employees should therefore not be divided merely according to positions or numbers.

The regulator will require competent inspectors, technical specialists, safety professionals, risk assessors, and regulatory managers. The service provider will require skilled personnel in airport operations, air navigation services, engineering, infrastructure, finance, information technology, safety, and commercial management. The fundamental question should therefore not be “How many employees go where?” but “What capabilities does each institution need to perform its functions?”

Losing experienced personnel or weakening institutional memory could itself become a significant transition risk. The new institutions should invest in professional development, recurrent training, leadership development, and retention of skilled personnel.

Financial autonomy and accountability

Independent regulation requires adequate and stable financial resources. Inspection, surveillance, safety auditing, technical capacity development, and safety-data management cannot be effective without sufficient funding.

Likewise, the service provider should be able to use revenues from airport and air navigation services systematically for infrastructure development, safety improvement, equipment modernization, and capacity expansion.

Financial autonomy, however, does not mean freedom from financial control. Transparent procurement, internal controls, independent auditing, risk management, and public financial reporting are essential. The performance of the new institutions should therefore not be judged simply by asking “How much was spent?” but also by asking “What results did that expenditure produce?”

Technology, data, and institutional culture

Restructuring should create not only new institutions but also a new working culture. The regulator should move from predominantly paper-based and reactive oversight toward risk-based and data-driven regulation. Modern information systems should support integrated safety-data management, electronic inspection, certification and licensing, and continuous monitoring of service-provider safety performance.

The service provider should pursue modernization of airport operations and air traffic management, integrated information exchange, electronic infrastructure records, and passenger-oriented digital services.

Data will increasingly become an institutional asset. Decisions on infrastructure investment, capacity expansion, maintenance, risk priorities, and resource allocation should increasingly be supported by reliable data and analysis. At the same time, sensitive aviation information and critical operational systems must be appropriately protected.

Measuring the success of restructuring

The success of restructuring should not be measured simply by whether new legislation is enacted, offices are opened, or boards are appointed. The regulator’s success should be measured by whether regulation actually improves aviation safety and compliance. The service provider’s success should be measured through safe services, operational efficiency, service quality, financial sustainability, and investment effectiveness.

Both institutions should therefore have clear performance indicators, annual targets, regular evaluations, and public reporting.

Autonomy and accountability are not contradictory. Autonomy is the capacity to make decisions; accountability is the responsibility to deliver and explain the results. The new institutions should therefore receive adequate authority, but they must also be required to deliver results.

Conclusion: Division is a means, not the goal

Restructuring the Civil Aviation Authority of Nepal is a major opportunity to strengthen Nepal’s civil aviation system. But its success will not be determined by the creation of two institutions. It will be determined by the quality of regulation, service delivery, safety performance, leadership, investment, and public accountability that follow.

Nepal needs an independent, impartial, technically competent, and credible regulator. It needs a safe, professional, managerially autonomous, financially sustainable, and service-oriented provider. It needs competence-based institutional leadership, with a capable director general and chief executive who have clear authority and clear responsibility for results.

Most importantly, it needs a civil aviation system in which safety is embedded as an institutional culture, rather than treated merely as a regulatory requirement. The restructuring should therefore be understood not simply as the division of employees, offices, assets, and responsibilities, but as an opportunity to rebuild Nepal’s civil aviation governance system.

The government should set policy. The regulator should independently apply the standards. The service provider should deliver safe and quality services with appropriate managerial autonomy. The board should protect the institution’s long-term interests and governance. Executive leadership should take responsibility for results. And the entire system should remain accountable to the public.

One principle must never be forgotten: Institutions can be divided, but responsibility for civil aviation safety cannot be divided. The division can create two institutions. But without capable leadership, independent regulation, professional service delivery, competent personnel, and a strong safety culture, it cannot by itself produce better outcomes.

The real question, therefore, is not how many institutions Nepal will have. It is how capable, independent, accountable, and safe those institutions will be.