27Nov2022

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Tag: Aviation Sector

OP-EDs and Columns

Will Reform of Nepal’s Civil Aviation Authority Ever Take Off?

SANTOSH SHARMA Poudel

The column originally appeared in The Diplomat on 9 August 2022. Please read the original article here.

On August 3, the U.N. aviation watchdog, the International Civil Aviation Organization (ICAO), formally asked the Nepali government to split the Civil Aviation Authority of Nepal (CAAN) into two separate entities — a service provider and a regulator. Nepal needed the restructuring to ensure a “clear separation of authority between service providers, operators and the regulatory authority” in order to improve air safety, ICAO said.

Back in 2009, during a safety audit by ICAO, Nepal had committed to work on legislation to split CAAN. However, 13 years later the proposed legislation remains in limbo.

Nepal has a poor aviation safety record. According to the Aviation Safety database, there have been 27 plane crashes in Nepal over the past three decades, 20 of them over the last 10 years. In May 2022, a Tara Air plane crashed in the mountainous Mustang district of Nepal, killing all 22 passengers and crew members, including six foreigners.

The European Commission (EC) imposed a blanket ban on Nepali airlines entering European airspace in 2013 after eight British nationals were killed in a Sita Air plane crash in 2012.

The rugged mountain terrain, a lack of investment in new planes, and poor infrastructure have contributed to dangerous air travel in Nepal. However, Nepal’s aviation governing structure shares some blame too.

CAAN is both the service provider and regulator in Nepal. That has engendered a conflict of interest, especially when it comes to safety regulations.

This prompted the EC to insist on CAAN splitting into two separate bodies before it considers lifting the ban on Nepali airlines. EU Ambassador Nona Deprez unequivocally stated that passing the bills to split CAAN is a “prerequisite” for Nepali airlines to be removed from the “air safety list.”

Nepali policymakers recognize the need to split CAAN. Since 2007, successive governments have put forward plans to end the dual functioning of the aviation regulator. Each government has expressed a commitment in bilateral (with the EU) and multilateral forums to split CAAN and urged the EC to revoke the ban. A subcommittee of the parliamentary International Relations Committee led by former Prime Minister Madhav Kumar Nepal even directed the government to split CAAN, saying it was mandatory.

Besides improving safety, restructuring CAAN has other tangible benefits for Nepal and Nepali aviation.

First, it will likely lead to the EC removing Nepal from its “air safety list,” opening European skies to Nepali airlines. It would boost revenue for Nepal’s struggling national carrier, Nepal Airlines. Nepal Airlines could not carry out chartered flights to the EU during COVID-19 rescue missions. As a result, the airline lost a big chunk of potential revenue, besides affecting the government’s ability to rescue Nepalis stranded in European countries during the pandemic.

Second, a restructuring would provide a shot in the arm to Nepal’s tourism industry. Around 15-20 percent of tourist arrivals to Nepal are from EU member countries. In 2019, almost a quarter of a million tourists from the EU visited Nepal. Nepal has announced a “Visit Nepal decade, 2023-2033” to revive the tourism sector. Without safe air services, the primary mode of transport for inbound tourists, the tourism decade cannot be successful. Nepal’s poor air safety record and the EU’s ban dissuaded many potential tourists from visiting Nepal. That would change if Nepal sets in motion the necessary changes to make flights safe.

Finally, the issue provides a litmus test of Nepali leaders’ commitment and delivery. Every government since 2007 has committed to and “prioritized” CAAN’s restructuring, but none have delivered.

On March 1 this year, the parliament secretariat included two aviation bills, the Civil Aviation Authority of Nepal Bill and the Air Service Authority of Nepal Bill, on the agenda for the meeting of the House of Representatives scheduled for the following day. However, then-Minister for Civil Aviation Prem Bahadur Ale did a volte-face and requested the parliament secretariat to hold back the bills. Some employees of the aviation regulator were opposed to the planned restructuring, he claimed.

The bills have not made any headway in the House of Representatives since, although the National Assembly, Nepal’s upper house, passed the bills unanimously.

On July 31, Jeevan Ram Shrestha, who succeeded Ale as aviation minister, said that Nepal would not immediately accept the EC’s condition and that CAAN would be restructured “according to need and at the appropriate time.”

Analysts attribute the lack of progress in passing the bills to the vested interest of some office holders and foreign airline operators. The existing system allows CAAN’s director-general to issue tenders and oversee compliance while issuing regulations governing the issues of licenses to airlines and crews. These officials would not want to give up this power.

Meanwhile, other international airlines have gained market share and revenue at the expense of Nepali airlines. Ale and Shrestha’s dilly-dallying shows the deep reach of such vested interests.

Going forward, the path for the government could not have been more straightforward. Yet vested interests have reigned over the common sense measure for 15 years. Shrestha’s statement provides little hope of a change to the status quo.

SAB Blog

SAB Blog – Nepal

Domestic Updates

Nepal held local elections on 13 May. It was the second such election after Nepal went into the federal governance structure. A few results were surprising as independent candidates won top mayoral positions in major cities like Kathmandu metropolitan city (the capital) and Dharan sub-metropolitan city. Nepali Congress topped the charts among the ruling coalition of five parties, and the Communist Party of Nepal (Maoist Centre) did well to come in third. The main opposition party, the Communist Party of Nepal (United Marxist Leninist), came second though most expected the party to perform better. Nepal will also hold its federal elections later this year in November.

A Tara Air flight carrying 22 people crashed into a mountain at an altitude of about 14,500 feet. It was Nepal’s 19th plane crash in 10 years and Tara Air’s 10th fatal one during the same period. The European Union (EU) has barred Nepali airlines from European airspace since 2013 owing to poor safety records. Meanwhile, Prime Minister Sher Bahadur Deuba inaugurated Nepal’s second international airport in Lumbini, the birthplace of Gautam Buddha.

Regional Engagement

On the occasion of Buddha Jayanti (Buddha’s birth, nirvana, and death all were on the same date), Indian Prime Minister Narendra Modi visited Lumbini, the birthplace of Buddha. The visit was Modi’s fifth to Nepal, and he had visited Hindu religious sites in his four previous visits. Nepali Prime Minister Sher Bahadur Deuba and Modi witnessed the exchange of six MOUs relating to the power and education sector. One was between India’s Satluj Jal Vidyut Nigam Ltd and Nepal Electricity Authority (NEA) to develop and implement the Arun IV hydropower project. Additionally, Nepal has signed agreements to sell up to 364 MW of electricity in the open market in India.

Nepal-India relation has been hot and cold during Modi’s reign. In 2014, Modi became the first Indian prime minister to visit Nepal in 17 years and received adulation across the board. However, the Indian blockade of Nepal in 2015 and overlapping territorial claims have tested the relations. Nevertheless, the relationship has recently improved, especially in energy connectivity.

Deuba inaugurated Gautam Buddha International Airport earlier that day, but Modi chose to land on a custom-built helipad 16 kilometers away. Many analysts argue that Modi snubbed the airport because it was built by a Chinese contractor (though financed by the Asian Development Bank). Nepal has the daunting task of balancing Indian and Chinese engagement and interests in Nepal.

At the foreign secretary-level, the 14th meeting of the Nepal-China Diplomatic Consultation Mechanism took place. Both sides talked about cooperation for mutual benefits and the further promotion of bilateral ties. However, China expressed displeasure at the US Undersecretary of State for Civilian Security, Democracy and Human Rights, Uzra Zeya’s visit to Tibetan refugee camps in Kathmandu (more on this below).

Global Engagement

Zeya, the United States under secretary for civilian security, democracy, and human rights, visited two Tibetan refugee camps in Nepal. She is also the special coordinator for Tibetan issues. She went forward with visiting refugee camps despite Nepal’s reservations, though Nepal formally feigned ignorance of the visit. Nepal is home to over 13,000 Tibetan refugees and is a sensitive issue in Nepal-China relations. Nepal ascribes to the one-China policy, which states Tibet and Taiwan are integral parts of China, ever since diplomatic relations were established.

To assuage Chinese concerns, Nepal re-expressed its commitment to the One-China policy. However, the amalgamation of geopolitics and human rights principles makes Nepal’s handling of Tibetan refugees tricky. It has also been an arena for Sino-US competition in Nepal.