CAAN split inches closer

The government has taken a significant step toward restructuring the aviation sector as the cabinet last week approved two crucial bills aimed at splitting the Civil Aviation Authority of Nepal (CAAN) into regulatory and service provider entities.

The cabinet meeting held on Friday green-lit the Bill to Amend and Consolidate Laws Related to Civil Aviation Authority of Nepal, 2024, and the Nepal Air Service Authority Bill, 2024. Minister for Culture, Tourism and Civil Aviation Badri Prasad Pandey had presented these bills to the cabinet on Sept 6 after the law ministry approved their drafts. This has paved the way for Minister Pandey to table the bills in parliament. 

The primary objective of these bills is to improve aviation safety by ending CAAN’s dual role as both regulator and service provider.  The restructuring of CAAN is crucial for the aviation sector as Nepali airlines have been unable to fly into European airspace since Dec 2013 when the European Union put Nepal in its air safety list following a Sita Air Twin Otter crash in the Manohara river in September 2012, which claimed the lives of all 19 onboard.

Earlier in October this year, the EU’s ambassador to Nepal Veronqiue Lorenzo said the ban can be removed if the law is passed to split the CAAN into a service provider and regulatory body.

Since the European Union Aviation Safety Agency (EASA) earlier this month lifted the flight ban on Pakistan International Airlines three months after Pakistan divided its civil aviation authority into three separate entities—Pakistan Civil Aviation Authority, Bureau of Aircraft Safety Investigation and the Pakistan Airports Authority—tourism ministry officials are hopeful that unbundling of CAAN into regulator and service providing entities would lead to the removal of Nepal from the air safety list.

The government first mooted the plan to split CAAN in 2007. The Third Interim Plan (2007/08-2009/10) said that recommendations from a study panel to split roles of CAAN as the service provider in civil aviation, airport operator and regulator were being considered.

In Oct 2018, a sub-committee of the International Relations Committee of the House of Representatives under former PM Madhav Kumar Nepal directed the government to immediately split the aviation body. The sub-committee said in its report that Nepal’s aviation industry is facing problems at the national and international levels due to the delay in the separation. The panel had directed the government to pass the civil aviation bills immediately.

Following the parliamentary committee’s direction, the then tourism minister Yogesh Bhattarai had tabled the bills in parliament in Feb 2020. 

In Aug 2021, the National Assembly unanimously approved the two bills. The International Relations and Tourism Committee had directed the then Prime Minister Pushpa Kamal Dahal to table the bills in the lower house of the federal parliament at the earliest in December last year, to no avail.