Aviation: Market Structure, Ownership Limits and the Safety Regime
Nepal caps foreign ownership of domestic airlines at 49%. Every Nepali-certified carrier is banned from EU airspace on the 9 June 2026 list.
Flight in Nepal is governed by two statutes rather than one, and the confusion between them runs through most secondary writing on the subject.
The Civil Aviation Act 2015 dates from 1959 in the Gregorian calendar. It is the operational statute, with the Civil Aviation Regulation 2052 (1995) beneath it, joined by the Civil Aviation (Accident Investigation) Regulation 2071 and the Civil Aviation Security Regulation 2073. The Nepal Civil Aviation Authority Act 2053 dates from 1996 and does something else entirely. It constitutes the Civil Aviation Authority of Nepal as a body corporate. References to “the Civil Aviation Act 2053” almost always mean the second of these. The distinction matters, because the powers an investor needs to trace, from certification and licensing to airport operation and charging, are split across both.
The Ministry has since made an Air Service Management Regulation 2082, published on its rules pages. The file is a scanned image and we could not read it, so the current air operator certificate categories, minimum capital and fleet requirements are not stated here. That a new air service regulation was made in 2082 is itself the useful signal. The licensing framework was rewritten in 2025/26, and any advice predating it should be checked.
Foreign ownership limits
Air services are capped rather than closed. Under the Foreign Investment and Technology Transfer Act 2075 (2019), as amended by the omnibus act authenticated on 31 March 2025:
| Activity | Maximum foreign ownership |
|---|---|
| International air services | 80% |
| Domestic air services | 49% |
| Aviation training and maintenance organisations | 95% |
Two features deserve attention. The caps sit in the investment statute rather than the aviation one, so the Department of Industry applies them at the approval stage instead of the Civil Aviation Authority applying them at certification. An investor’s ownership question is settled before the regulator sees the file.
And the 49% domestic cap is the operative one for tourism. Nepal’s domestic network is what makes trekking and mountain tourism commercially possible. The Kathmandu–Lukla, Kathmandu–Pokhara and Nepalgunj–mountain-airstrip services are the physical delivery mechanism for the trekking product. A foreign investor can take a minority position in that and can never control it. Add the closure of travel and trekking agencies to foreign investment altogether, and the two links that decide whether a trekking product works, the agency and the aircraft, are both beyond foreign control.
The EU air safety list
Nepal appears in Annex A of the EU Air Safety List. The current version is dated 9 June 2026 and was made by Commission Implementing Regulation (EU) 2026/1317, the 48th update since the list began in 2006. It covers 154 airlines in total and identifies 16 states’ aviation authorities as lacking adequate safety oversight.
The Nepal entry is a blanket one. It covers all air carriers certified by the authorities responsible for regulatory oversight of Nepal, and names 16 individual carriers within that heading, among them Nepal Airlines Corporation, Buddha Air, Himalaya Airlines and Yeti Airlines. Nepal is one of 22 states in Annex A. At the 9 June 2026 update the Commission removed carriers certified in Kyrgyzstan and added one Algerian carrier. Nepal’s position did not change.
Three things follow that are commonly misstated.
The ban applies to operating into and within the European Union. It does not stop Nepali carriers flying to Gulf, South Asian or Southeast Asian destinations, and it does not stop European travellers using Nepali domestic services once they are in Nepal. What it forecloses is a direct Kathmandu–Europe service by a Nepali carrier, and it is why European long-haul traffic to Nepal arrives on Gulf and Asian carriers through their hubs.
It is a state-level finding rather than a carrier-level one. Individual Nepali airlines are listed because their certifying authority is listed. No amount of investment in one carrier’s fleet or procedures lifts the ban, and any proposal presenting fleet renewal as the route off the list is describing the wrong problem.
It attaches to the regulator. That is why the structure of the Civil Aviation Authority of Nepal has been the subject of reform proposals for years, and why the question below is the one to track.
Carriers and airports
Nepal has no publicly accessible register of air operator certificate holders that we could retrieve. The closest substitute is, awkwardly, the European Commission’s. The Annex A entry names 16 carriers certified in Nepal, among them the state-owned Nepal Airlines Corporation and the principal private operators Buddha Air, Himalaya Airlines and Yeti Airlines. That is a small market by any measure, divided between a domestic network of short mountain sectors and a much thinner international operation.
The Civil Aviation Authority of Nepal presents three airports as international on its own site: Tribhuvan International in Kathmandu, Gautam Buddha International at Bhairahawa and Pokhara International, alongside a network of domestic fields. Tribhuvan handles the overwhelming majority of international traffic. The two newer airports were built to relieve it and to open direct access to the Lumbini and Pokhara markets.
Whether they are doing so is the question a tourism investor most needs answered, and we cannot answer it. Utilisation figures for Gautam Buddha and Pokhara are published at no source we could retrieve, and the figures circulating in commentary trace back to no primary release. We state no traffic numbers for either. A hotel or resort proposal in Pokhara or Lumbini that assumes international connectivity should treat the schedule of actual services as the evidence, rather than the existence of the runway.
Splitting the regulator
The Civil Aviation Authority of Nepal is at once the safety regulator, the air navigation service provider and the operator of the country’s airports. International safety assessments have repeatedly identified that combination of regulator and regulated entity in one body corporate, and splitting it into a regulator and a service provider has been the standing proposal for years.
We cannot state whether that separation has been enacted. Two bills to effect it have been before Parliament, and we could not obtain a primary source establishing their current status, whether they have been authenticated, or whether any resulting act has commenced. So we say nothing in either direction. That is a less satisfying answer than the confident assertions available elsewhere, and a more accurate one. Anyone whose investment case depends on the split should get the position in writing from the Ministry before proceeding.
The same caution applies to Nepal’s ICAO standing. The Universal Safety Oversight Audit Programme publishes effective implementation scores by state and records any Significant Safety Concern. ICAO serves those results through an interactive tool that returned no data when we accessed it, so we have verified neither Nepal’s current score nor whether any concern is outstanding. Both are widely quoted in Nepali commentary, and we could not confirm any version in circulation.
What this means for tourism
An investor building a tourism business in Nepal inherits the aviation position whether or not they invest in aviation.
The EU listing shapes route structure, and with it the cost of getting European guests to Kathmandu. The domestic network’s capacity and reliability decide whether an itinerary depending on a mountain flight can be sold with confidence, and mountain flying in Nepal is weather-constrained in ways no regulatory reform will change. The 49% cap means a tour operator cannot integrate into the flying its product depends on.
None of that is a reason to stay out. It is a reason to model the aviation dependency explicitly, rather than treating it as infrastructure that will simply be there. The number to know is the proportion of an itinerary’s value riding on a single domestic sector. For a Khumbu product, it is close to all of it.
Sources
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Commission Implementing Regulation (EU) 2026/1317 and the EU Air Safety List
European Commission, Directorate-General for Mobility and Transport · Adopted and published 9 June 2026; 48th update of the list · Tier 3 — Multilateral institution
Supports: That the list was last updated on 9 June 2026 by Commission Implementing Regulation (EU) 2026/1317, that it covers 154 airlines, that Kyrgyz carriers were removed and an Algerian carrier added at that update, and that 16 states' aviation authorities are identified as lacking safety oversight.
Accessed 26 August 2026
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List of airlines banned within the EU (Annex A and Annex B), version of 09/06/2026
European Commission · 9 June 2026 · Tier 3 — Multilateral institution
Supports: That Nepal appears in Annex A under a heading covering all air carriers certified by the authorities with responsibility for regulatory oversight of Nepal, with 16 carriers named, and that 22 states appear in Annex A.
Accessed 26 August 2026
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गैर सैनिक हवाई उडान ऐन, २०१५ (Civil Aviation Act, 2015)
Government of Nepal, published by the Ministry of Culture, Tourism and Civil Aviation · 1959 (2015 BS) — published by the Ministry as a prevailing act as at August 2026 · Tier 1 — Primary legal instrument
Supports: That the Civil Aviation Act is a 2015 BS instrument and remains among the acts the Ministry publishes as current.
Accessed 26 August 2026
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नेपाल नागरिक उड्डयन प्राधिकरण ऐन, २०५३ (Nepal Civil Aviation Authority Act, 2053)
Government of Nepal, published by the Ministry of Culture, Tourism and Civil Aviation · 1996 (2053 BS) — published by the Ministry as a prevailing act as at August 2026 · Tier 1 — Primary legal instrument
Supports: That the Civil Aviation Authority of Nepal is constituted under a separate 2053 BS act, distinct from the Civil Aviation Act 2015.
Accessed 26 August 2026
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Ministry of Culture, Tourism and Civil Aviation · Listing accessed August 2026 · Tier 2 — Official publication
Supports: The set of aviation subordinate legislation the Ministry currently publishes, including a 2082 BS air service management regulation.
Accessed 26 August 2026
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Civil Aviation Authority of Nepal — official website
Civil Aviation Authority of Nepal · Accessed August 2026 · Tier 2 — Official publication
Supports: That CAAN presents Tribhuvan International, Gautam Buddha International and Pokhara International as Nepal's international airports and operates the domestic airport network alongside its regulatory role.
Accessed 26 August 2026
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Pradhan & Associates · 6 April 2025 · Tier 6 — Professional or news source
Supports: The aviation ownership caps written into FITTA by the omnibus act authenticated 31 March 2025: 80% international air services, 49% domestic, 95% training and maintenance.
Accessed 26 August 2026
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