KATHMANDU: The Government of Nepal has released the draft Civil Aviation Authority of Nepal Act, 2083 (2026), proposing one of the country’s most significant aviation sector reforms in decades. The legislation seeks to align Nepal’s civil aviation system with international standards by legally separating regulatory responsibilities from airport and air navigation service operations.
The proposed law would fundamentally restructure the current Civil Aviation Authority of Nepal (CAAN), ending its long-standing dual role as both regulator and service provider. If enacted, CAAN will function solely as the country’s aviation regulator, while airport management, air navigation services, aviation training, and other operational functions will be transferred to a separate service provider.
Under the draft bill, CAAN will be responsible for issuing aviation licences and permits, establishing and enforcing safety standards, conducting inspections, monitoring compliance, and regulating the civil aviation sector. Operational responsibilities-including airport construction and management, air navigation services, and aviation-related training-will be carried out by an independent service provider established under a separate legal framework.
The bill also introduces stricter legal controls over aviation services. No individual or organization will be permitted to operate airports, provide air navigation services, or offer other aviation-related services without authorization from the regulatory authority. The government believes this clear institutional separation will eliminate conflicts of interest while strengthening accountability and regulatory independence.
The proposed legislation also outlines a new governance structure for CAAN. The Minister or State Minister responsible for civil aviation will serve as Chairperson of the Authority’s Board of Directors. The board will also include joint secretaries from the Ministry of Tourism and the Ministry of Finance, experienced aviation professionals, and the Director General as members, creating a governance structure that combines government oversight with technical expertise.
Executive management of the Authority will be led by a Director General appointed by the government for a four-year term from among first-class gazetted officers or senior officials within the Authority. The draft also includes provisions allowing the government to remove the Director General for unsatisfactory performance or violations of the law.
To strengthen aviation safety oversight, the bill significantly expands the powers of aviation inspectors. Inspectors appointed by the Director General will have the authority to enter airports, aircraft, maintenance organizations, and aviation-related facilities to conduct inspections, review records, and issue immediate directives where safety risks are identified. In cases involving serious safety concerns, inspectors may recommend suspending flight operations or aviation licences.
The proposed legislation also introduces tougher financial penalties for safety violations. Individuals or organizations operating unregistered aircraft, breaching aviation safety standards, conducting flights without required maintenance, or disrupting air navigation services could face fines ranging from Rs 500,000 to Rs 1.5 million, reflecting the government’s emphasis on strengthening compliance and aviation safety.
The bill further clarifies CAAN’s financial framework, providing that its revenues will come from service fees, government grants, foreign assistance, and loans. However, any foreign loans or development assistance will require prior approval from the Ministry of Finance before they can be mobilized.
To ensure a smooth institutional transition, the draft includes provisions for existing employees. Staff currently working under CAAN will be required to apply for adjustment into the new organizational structure within 60 days of the law coming into force, while their existing salaries and employment conditions will remain protected during the transition.
The legislation also introduces stricter conflict-of-interest provisions aimed at enhancing regulatory independence. Individuals appointed as Chairperson, board members, or Director General will be prohibited from holding any direct or indirect financial interest in aviation service providers. In addition, former senior officials will be barred from joining any entity regulated by CAAN for two years after leaving office, a measure intended to strengthen transparency and public confidence in Nepal’s aviation regulatory system.
