Nepal's aviation sector has emerged as an essential element of its economy, linking remote areas, facilitating tourism, and enhancing trade. This rapidly evolving industry plays a pivotal role in the nation's growth, given its landlocked geography and challenging terrain. The sector's remarkable expansion is powered by growing tourist interest in Nepal's natural beauty, leading to increased connectivity by domestic and international airlines. This surge in connections has not only elevated tourism but also contributed significantly to trade and overall economic progress.

 

Getting approval from the Nepal Investment Promotion Board marks the initial stage of drawing foreign investment into Nepal's aviation sector, encompassing domestic and international airlines, ground handling, as well as maintenance, repair, and overhaul (MRO) services.Foreign investment is permissible up to 80% for international airlines, 49% for domestic airlines, and 95% for aviation maintenance, repair, and overhaul (MRO) activities.

In case of Domestic Airlines:Foreign Direct Investment is authorized to reach a maximum of 49 percent in both scheduled air transport and domestic airline services within Nepal. Foreign air carriers are also granted the opportunity to invest up to 49 percent of their paid-up capital in Nepali airline companies that are engaged in scheduled and non-scheduled air transport. This investment is subject to specific
conditions, including:
a) Approval from Nepal's Investment Board is required for the investment.
b) The 49 percent FDI limit is applicable.
c) Adherence to relevant regulations and other applicable rules.
d) The Chairman and a minimum of two-thirds of the Board of Directors must be Nepali citizens.
e) Substantial ownership and control must be held by Nepali nationals.
In Nepal, nine Airlines are operated, they are Buddha Air., Guna Airlines, Nepal Airlines Corporation, Shree Airlines, Sita Air, Summit Air, Saurya Airlines., Tara Air. Yeti Airlines.Likewise, Rotary wing aircraft includes Air Dynasty Heli services Pvt. Ltd, Altitude Air, Annapurna Helicopter, Fishtail Air, Heli Everest, Kailash Helicopter Services, Manang Air, Mountain Helicopters, Mustang Helicopter, Prabhu Helicopters, Shree Airlines, Simrik Air Pvt. Ltd 1 .

In case of International Airlines:Foreign direct investment of up to 80 percent is permissible in international airlines. The scheduled airline sector presents a promising investment opportunity due to robust growth in passenger traffic. This trend is exemplified by India, where airlines like Jet Airways, Air Asia India, and Vistara have already experienced the advantages of FDI.

To operate an aviation business in Nepal, an organization must obtain a license through the procedure outlined in the Civil Aviation Act, 2015. It is imperative that organizations involved in civil aviation adhere to this requirement, as conducting aviation-related activities without the necessary permit is prohibited. Civil aviation related organization includes airlines, flight training institutes, aircraft and aircraft parts maintenance institutes, aircraft maintenance training institutes, recreational airlines, recreational aviation training institutes 2 etc.

Required document for a Airlines Operating license 3

The following details should be attached with the application and each document submitted should have the signature of the applicant and seal of the institution.

1. The details mentioned in the application format should be clearly filled.
2. Official certificate of the contact person acting on behalf of the institution.
3. Certified copy of the citizenship of the principal shareholder or investor.
4. 2 copies of the sectoral feasibility study report of the business to be operated.
5. Detailed description of the institution conducting the feasibility study, proof of eligibility.
6. List of documents included in the application

For the purpose of this procedure "Feasibility study" means a document covering the following topics.

(a) Financial capacity
 - Structure of capital
 - Proof or confirmation of defaulted capital
 - Income-expenditure statement for last three years (in case of operating organization)

(b) Institutional
  -Organization structure
  -Policy, Rules
  -Managerial structure
  -Arrangements related to work conduct
  -Maintenance and quality control system

(c) Technical
- Detailed description of equipment number, type (including aircraft)
- Analysis of acquisition methods and utilization processes
- Operational (operational) planning
- Technical manpower development plan (If foreign manpower is to be used, how much period)
- Technical infrastructure development plan

(d) Professional
- International/National Traffic Analysis
- Traffic analysis of the area and route you want to operate the service
- Seat capacity obtained from air service contracts and traffic on the routes it intends to operate is   the right     enough? If not, what kind of arrangement is appropriate? So Analytical study of sucharrangement
- Organization's business plan and action plan.
- Qualification and experience of directors and managers
(Details of Air Service Agreement is not required for domestic service operation)
Eligibility of Airline Operating Organization 4 : A company or firm with the following paid up capital registered as the Airline Operating Organization and Air Flight Training Organization in this procedure it will be eligible to apply for a license.
a) At least one crore rupees for operating a recreational airline including recreational airline  training institute
b) At least fifteen crore rupees for domestic airline operations
c) At least fifty crore rupees for operating international air services
d) At least ten crore rupees to operate an Air Flight Training Institute (Flying School).
e) At leastfivecrorerupeesfor operating aircraft and aircraft parts maintenance and at least two crore rupees to operate an aircraft maintenance training institute
f) Registered in Nepal according to the prevailing law and the main business transactions are in the Nepal and the majority of the shares must be owned by Nepali persons.

Provisions relating to Committees 5
1. The Ministry will form a five-member evaluation committee under the chairmanship of the head of the aviation-related division to recommend whether or not it is appropriate to grant a license to an organization that wants to operate an organization related to civil aviation. The committee can take the services of experts as needed.
2. The meeting of the committee shall be held as determined by the chairman.
3. The procedure for the meeting of the committee shall be as determined by the committee itself.
4. Based on the documents submitted by the committee with the application, of International Air Services, Domestic Air Services, Recreational Air Services Training Institute, Aircraft Maintenance Training Institute and the aircraft and aircraft parts maintenance organization will submit a report with evaluation and recommendations after determining the rating.
5. The committee shall make the following arrangements to complete its work expeditiously and on time:
a. According to the workload, the head of the division may appoint the authorized staff under his/her authority to carry out the work of the secretariat of the committee.
b. According to the instructions of the chairman of the committee, responsible for calling the
    meeting of the committee, taking minutes of the committee, preparing documents required by the
    committee and keeping up-to-date records of documents, registration, renewal and all technical
    and administrative work related to the license will be of the officer.
6. Applications related to international air service operations will be evaluated within three days and
    applications related to domestic air service operations will be evaluated within fifteen days and
    other applications will be disposed of within seven days.
7. The facilities of the members and officers of the evaluation committee will be as approved
    according to the financial rules and guidelines.

Permission Letter 6
Organizations related to civil aviation will be given license in the format of schedule 4.

License renewal 7
1. The license period will be four years.
2. Before the license period expires, the licensed organization must disclose the necessary details
    related to the operation of the organization related to civil aviation and submit an application to
    the Ministry for the renewal of the license.
    According to this procedure, the licensed organization must submit an application to the Ministry
    for renewal of the license by disclosing the necessary details 30 days before the expiry of the
    license period. If the application is submitted 30 days late and the renewal process cannot be
    completed on time due to this, a late fee will have to be submitted
3. If it is found appropriate to renew the license after examining the application received, the
    Ministry shall take the renewal fee and renew such license.
4. While renewing the license, the following documents must be submitted along with the
    application with technical inspection from the authorized organization:
a) Safety Audit Report
b) Service level and capacity assessment
c) Income-expenditure statement
d) Description of equipment
e) Physical structure
f) Foreign Manpower Details
g) Technology transfer status
h) Letter of recommendation from Nepal Civil Aviation Authority
i) License (original/duplicate)
If the license holder who has not renewed within the given deadline, must submits an
application within the following deadline along with the following late fee, the license can be
renew 8 :
a) On application for renewal within three months from the date of expiry the additional fee will be
    twenty five percent of the renewal fee
b) If application for renewal is made within 6 months from the date of expiry, the additional fee will
    be fifty percent of the renewal fee
c) on application for renewal within nine months from the date of expiry, the additional fee will be
    seventy-five percent of the renewal fee
d) On application for renewal within one year from the date of expiry,the additional fee will be
    100% of the renewal fee.
The license which is not renewed within the additional period is automatically revoked

​Security Confiscation 9 :
The security amount will be confisticated in the following circumstances:
(a) Failure to operate services within the stipulated period as per the terms of service,
(b) Violation of prevailing laws, regulations, and directives.
Even if the validity period of the permit is four years, service operations must cease within the time
limit,if the conditions outlined therein are not met.

Relase of Security amount 10 :
The following from Nepal Civil Aviation Authority after 6 months from the date of initial service
operation after examining the details and receiving the application for release of securityamount with
recommendation, the application is received
The amount shall be released within seven days from the date of:
(a) Organization's Technical Audit Document
(b) Evidence of level of service and open capacity
(c) Income-expenditure statement
(d) Description of physical structure
(e) Description of equipment (of aircraft);
(f) Recommendation of fulfillment of conditions of service

Procedure for acceptance of the proposal 11
1. The ministry may approve the proposal if it deems it appropriate after considering the
committee's recommendation and national and international needs and propriety.
2. The information about the acceptance of the proposal will be given to the applicant within 3 days.
3. Within (seven) days from the date of receipt of the notification that the proposal has been
accepted, the related organization shall submit the fee and route royalty
4. The proposal of the organization that does not file the route royalty and the deposit in time will be
rejected.
5. In the event that the license is not granted, the notice with the reason for the same shall be given
to the applicant within three days from the date of completion of the evaluation work.

Arrangement related to operate air service organization 12 :
In the case of an operating airline, the license or contract related to such operation shall be as specified.

10. (b) Equipment (Fleet) addition or change 13
1. Fleet addition or change will be applicable only in the case of airlines operating.
2. The company that wants to add more aircraft equipment should disclose the necessary details of
the equipment it wants to add and submit an application to the Ministry for adding or changing
the fleet.
3. when applying for addition or change of fleet, correspondence, letter of credit (LC) or other
related documents with the company selling or leasing the aircraft must be submitted as well as
the following documents.
a. Additional Operating Certificate (AOC)
b. How many of the fleet mentioned in the permit are in operation? In case of aircraft Fleet
in operation is flying under which registration? And now the number of in operation fleet
with more fleet is going to reach? Such information related documents should be
submitted.
c. Details of the Sectors where additional aircraft will be flown
d. Type Certificate and Specification of the aircraft to be added should be submitted.
e. Document certified by the tax office that the company has paid income tax.
f. Safety Audit Report
g. Details of the company's income and expenses
4. If it is found appropriate to add fleet (equipment) while examining the application received, the
equipment can be used with the condition that the above equipment should be imported and
operated within 1 (one) year from the date of decision.
5. If for any reason the airline company is unable to import and operate within 1 (one) year from the
date of obtaining the approval to add the equipment, then a maximum period of 6 months can be
extended from the date of expiration of that date.
6. If the equipment is not operated during the extended period, such airline company will not be
given approval to renew or change the equipment for 2 years.
7. If the equipment (Fleet) mentioned in the license has not been put into operation even once,
approval will not be given to add new equipment. But after the service is operational, the airline
company that wants to change the fleet can be approved for the change based on the justification
of the fleet.

After receiving the AOC from the International Air Service Organization, when requesting a letter
of recommendation for foreign flights, the following documents must be attached 14 :
a) Equipment Rating Certificate
b) Certificate of citizenship of shareholders and board directors
c) Address and telephone, fax, telex of the head office of the company
d) Air Operator Certificate
e) Air Traffic Operation Permit
f) Approved Operations Manual
g) Detailed description of fleet of aircraft
h) Aircraft ownership
i) In case of lease purchase, a certified copy of the agreement
j) Proof of agreement to fly the route received if the lease is purchased
k) Name, address, phone, fax of the Airworthiness, Licensing and Accident Investigation Officers
l) Comprehensive Aviation Safety and Security Program (as per Annex 17 of ICAO) of the airline
m) The work, duties and rights of the executive head of the organization according to the law and
rules
n) official certificate.
o) Passenger, Cargo, Baggage and Third-Party Liability work and certified copy of the insurance
policy carried by the airlines accordingly.
p) Signature of Airline Representative (Certified from the concerned Executive Head of Airline)
q) Approved fares charged by the airline on the respective route.
r) Certified copy of management agreement with other airlines, if any
s) Proof of flight schedule approval
t) Within the provisions of the air service agreement, new Nepali airlines that want to operate
international flights from Nepal and foreign airlines that want to operate flights from friendly
countries in Nepal must fulfill the provisions of the above-mentioned and submit it 60 days
before starting regular flights. After fulfilling those provisions, a request for flight permission will
be made through diplomatic channels.

Bank Guarantee to be submitted 15
Within seven days from the date of receipt of the license by the licensed institution the following
the following bank guarantee must be filed with the Ministry.
a) Five lakh rupees for Recreational Aviation and Recreational Aviation Training Institutes to
operate a period of one year
b) Twenty lakh rupees for running domestic air services for a period of two years
c) Fifty lakh rupees for operating international air services for a period of two years
d) 10 lakh rupees after fixing the period of two years for operating an Air Flight Training Institute
(Flying School).
e) 10 lakh rupees for a period of two yearfor operating aircraft and aircraft parts maintenance
establishments
f) Five lakh rupees for aircraft maintenance training institute for a period of two years


(2) Recreational aviation and recreational aviation training institute within one year from the date of
obtaining the license by the licensed organization, air flight training (flying school), aircraft, aircraft parts
maintenance organization, aircraft maintenance training organization and other organizations within two
years. In- case of non-operation, the bank guarantee filed will be confiscated.
(3) If the licensed institution submits an application to withdraw the bank guarantee along with the proof
that it has operated the service within the specified time period, the ministry shall return such bank
guarantee.

To consult or get legal advice from our expert Airlines Registration in Nepal; Contact us at: 977-01-
4102849/977-9851059026, Prime Law Associates, Anamnagar, Kathamndu, info@primelawnepal.com ,
www. primelawnepal.com

This article is for informational purposes only and shall not be construed as legal advice,
advertisement, personal communication, solicitation or inducement of any sort from the firm or
any of its members. The firm shall not be liable for consequences arising out of any action
undertaken by any person relying on the information provided herein.