A draft policy allows up to 90% FDI in international airlines. Could this finally give Nepal Airlines and the country’s aviation sector the big break it needs?

What if Nepal’s next aviation success story wasn’t even a Nepali airline?

Sounds a bit strange, doesn’t it?

But that’s exactly the kind of future Nepal’s new draft Civil Aviation Policy is hinting at. A future where international airlines don’t just stop by for a quick landing, but actually set up operations here.

And the big headline? International airlines like Nepal Airlines or Himalaya Airlines could soon be allowed to bring in up to 90% foreign investment, a huge jump from the current 49% limit.

This means Nepal Airlines and Himalaya Airlines could potentially restructure to attract more global capital, expand routes, and modernize their existing fleets.

This isn’t just another dusty old document. It’s a serious move to finally update Nepal’s aviation rules; which, believe it or not, haven’t been touched since 2006.

And there’s a bigger reason behind all this.

FDI in Nepal has been drying up. Investors are getting cautious. Big promises haven’t always turned into real projects. So now, the government is trying something new: opening up our skies and hoping that global airlines might just bring the investment, jobs, and energy we desperately need.

Will it work?
Can this really help fix our underused airports, improve connectivity, and maybe even make flying cheaper?

Let’s dig into what the policy says, why it’s happening now, and what it could actually mean for the future of flying in Nepal.

Why Now? The Context Behind the Reform

To understand why this new aviation policy even exists, we need to look at what Nepal has been working with until now, and it’s not pretty.

Our current aviation policy? It was written back in 2006. That’s almost two decades ago, back when YouTube had just launched and the iPhone didn’t even exist. So imagine trying to run an airline in 2025 with rules made before Instagram was born.

A lot has changed since then. Planes are smarter, airports are more advanced, and the way countries manage their skies has evolved. But Nepal? Still stuck in the past. That’s why the Ministry of Tourism is finally trying to hit refresh.

Let’s break down what pushed them to this point:

1. Missed Opportunities, Empty Airports

Nepal built two shiny international airports; Gautam Buddha International Airport (GBIA) and Pokhara International Airport, but they’ve been collecting more dust than flight miles. Despite being ready to serve thousands of passengers, these airports have barely any international flights. Most airlines still cram into Tribhuvan International Airport (TIA) in Kathmandu, which is already bursting at the seams.

Meanwhile, our own domestic airlines have grown sluggish, stuck with limited reach and aging fleets.

2. Global Pressure, Local Urgency

Global bodies like ICAO have been urging Nepal to modernize its aviation system. Countries like India and the UAE opened up their skies years ago, and saw tourism and trade take off. Nepal, meanwhile, is still catching up.

But the issue isn’t just infrastructure, it’s governance.

Right now, CAAN plays a double role: it manages airports and regulates airlines. That’s like being both referee and player. This has raised serious concerns, and the government is under pressure to split CAAN into two separate bodies: one for regulation, another for operations.

With more Nepalis flying every year, we don’t just need more flights, we need a system we can trust.

3. It All Comes Down to Money

Let’s be honest. Aviation is expensive. Planes, safety checks, training, fuel, maintenance; it all costs a fortune. And the Nepali government (GoN) simply doesn’t have that kind of money right now.

So the answer? Bring in foreign investors who do.

And that’s exactly what this new policy is trying to do. Open the door wider to global players, while still trying to keep Nepal in the cockpit.

The 90% FDI Proposal in Focus: What It Means

Okay, so what’s the actual big change?

Here it is: The draft policy says foreign investors can now own up to 90% of an international airline operating in Nepal. That’s a huge leap from before.

Let’s break this down in plain language:

This isn’t just about allowing a few foreign planes to land here. It’s about saying: “Hey, if you’ve got the money, tech, and experience, come build your aviation business in Nepal. We’ll let you own most of it.”

So, What Could This Actually Do?

• Attract budget and regional carriers: Think AirAsia, FlyDubai, IndiGo; low-cost airlines that already fly to Nepal occasionally. With this policy, they could set up shop here and operate more frequently, even build hubs.
• Bring new life to GBIA and Pokhara airports: More airlines = more international routes = less dependence on crowded Kathmandu airport.
• Encourage joint ventures: Nepali investors or aviation entrepreneurs could team up with international players to bring modern services to Nepal.

Of course, it’s not without risks (we’ll get to those later), but the message is clear: Nepal wants to go global, and fast

The Open Skies Push: Quiet but Big

If you haven’t heard the term “Open Skies.” before, It sounds poetic, but it’s actually a big deal in aviation. 

So, what does it mean?

In simple terms, it’s when a country loosens its rules to allow more foreign airlines to operate freely, often without strict limits on routes, stops, or passenger numbers.

And Nepal’s new draft policy? It’s pushing us gently toward this direction.

1. Fifth Freedom Rights

The draft proposes something called “Fifth Freedom Traffic Rights.”

Let’s say a foreign airline flies from Kuala Lumpur to Pokhara, and then continues to Dubai, and picks up passengers in Nepal along the way.

That’s the Fifth Freedom in action.

The government wants to allow this from Pokhara and GBIA, which could instantly boost traffic at these underused airports and turn them into regional transit hubs.

2. From Ownership Rules to Practical Rules

Another big move: replacing the old “Substantial Ownership and Effective Control” rule with the more modern “Principal Place of Business and Effective Regulatory Control”.

Sounds complicated? Here’s the simple version:

The old rule said a country’s airline had to be majority-owned by people or companies from that country. That limited flexibility.

The new rule says: if the airline’s main office is in the country and the aviation authority can regulate it properly, then it’s good to go, even if foreigners own most of it.

That’s how global airlines with joint ventures operate these days. Nepal’s just catching up.

3. And Then Comes Code-Sharing

Code-sharing is when two airlines team up. You buy a ticket from Airline A, but you might actually fly on a plane operated by Airline B.

It sounds confusing, but it gives you more flight options without needing more airlines.

The new policy says airlines can update their agreements to make this easier, so passengers can enjoy better routes, smoother connections, and more choices.

Simple win, right?

So, What Else is New? A Quick Glance at the Other Big Changes

The 90% FDI proposal may be grabbing all the headlines, but the draft policy has quite a few other upgrades worth noticing. Let’s take a quick tour.

1. Building Future Aviation Talent

Nepal doesn’t just need new planes, it needs new people to fly, fix, and manage them.

That’s why the Ministry of Culture, Tourism and Civil Aviation wants to align with something called ICAO’s NGAP (Next Generation Aviation Professionals); basically, a global push to train and develop young aviation talent.

The draft policy suggests creating more internships, skill-building programs, and aviation career pathways for Nepali youth. Think pilots, air traffic controllers, engineers, and ground staff, all trained for the future, not stuck in the past.

2. Passengers Might Finally Get Some Rights

Ever had your flight canceled or luggage lost and wondered, “Now what?”

Right now, there aren’t strong legal protections for domestic passengers in Nepal. The new policy plans to fix that by introducing laws around passenger rights, insurance, and compensation.

That means if something goes wrong, you might actually have rights, not just regrets.

3. No More Flying Junkyards

For years, Nepal has been known as a bit of a dumping ground for second-hand planes, old, worn-out, and sometimes downright risky.

This new policy says: no more.

Under the new rules:

• Pressurized aircraft older than 15 years will not be allowed in
• Or if they’ve passed 50% of their design life or been pressurized more than 35,000 times, they’re out

That’s a big upgrade from the current, more relaxed standards. And it means safer skies as well

4. Airports That Work for Everyone

The draft also talks a lot about accessibility and inclusion, making airports easier to use for people with disabilities, families, and everyone in between.

Plus, there’s a plan to coordinate better between local, provincial, and federal governments before building any new airport. This means no more shiny runways in the middle of nowhere unless there’s a real need.

Even private aircraft for personal, non-commercial use will now be allowed, but with strict rules to ensure safety.

In short: smarter airports, safer planes, and more skilled people. A full-system reboot, if it goes to plan.

Challenges: The Hard Landing Behind the Soft Takeoff

Now, before we get too carried away, let’s be real.

This policy sounds great on paper, but making it work is a whole different flight path.

1. Is The Government Ready for This?

Opening up Nepal’s skies to global airlines sounds exciting. But can the Ministry actually handle it?

From enforcing new safety laws to protecting passengers, it’s a big job. And Nepal doesn’t exactly have a great track record when it comes to fast or clean implementation.

If you invite the world to your airport, you better have your house in order.

2. Ghost Airports?

We keep hearing about GBIA and Pokhara International Airport becoming major hubs, but let’s be honest: they’re not there yet.

Without direct incentives, anchor airlines, or reliable traffic, these airports may continue to stay mostly empty.

Will this new policy change that? Or will we keep building terminals that no one uses?

3. Flip-Flop Policy Culture

Let’s not forget that Nepal has a habit of changing its mind.

Just recently, a major banking rule for real estate was rolled back in 6 days. Investors notice these things. A policy is only as powerful as its staying power.

4. Where’s the Money?

Inclusion, safety upgrades, training, better infrastructure. It all sounds good, but who’s paying for it?

The government is tight on cash. Private sector interest is cautious. Foreign investors are watching and waiting.

Without a strong financial backbone, this policy could end up being a high-flying idea with no fuel.

What This Means for Different People

So, who wins, who worries, and what should you care about?

Let’s break it down.

1. For Foreign Airlines

This is a golden opportunity. Nepal is an untapped market with scenic destinations and growing demand.

They can now invest more, fly more, and maybe even set up shop through local partnerships.

But the risks? Regulatory hiccups, political instability, and unpredictable policy changes from the government.

2. For Nepali Airlines

It’s crunch time.

Local carriers will have to step up, merge, innovate, or collaborate with international partners. Otherwise, they risk being left behind in their own skies.

Nepal-based international carriers like Nepal Airlines and Himalaya Airlines could be among the biggest beneficiaries, if they restructure to welcome foreign investors and tap into the global capital and expertise this policy invites.

3. For Passengers

This could be the start of cheaper tickets, better service, and more choices.

More international flights from cities like Pokhara and Bhairahawa? Yes, please.

4. For Investors

From aircraft maintenance (MRO) to training centers and airport logistics, the policy opens new semi-liberalized investment doors.

Smart investors might look at cargo, fuel supply, regional flights, or even tourism tie-ups.

5. For Nepal’s Economy & Tourism

If everything works, we’re talking more tourists, more trade, and better global connections.

Think fresh produce flying out faster, medicine coming in cheaper, or a tourist from Singapore landing directly in Pokhara.

But if things stall? Then we’re just back to square one, with empty airports and missed chances.

Final Thoughts: Will Nepal Take Off or Stay Grounded?

Nepal is standing at the edge of a long runway. Engines humming. Wheels ready. A new civil aviation policy, packed with bold reforms, is sitting in the cockpit.

But the question is: Will we actually take off this time?

Allowing up to 90% foreign investment in international airlines is a bold statement. It says Nepal is ready to be part of the global aviation game; that we’re not afraid to open our skies, bring in expertise, and connect more deeply with the world.

But dreams don’t fly on policy drafts alone.

To turn this plan into real progress, the government will need to do more than publish a new rulebook. It will need to regulate better, build smarter, listen to stakeholders, and most importantly, not lose altitude when politics, egos, or money get in the way.

And maybe, just maybe — before we focus on raising the foreign investment cap, we need to ask why foreign investors haven’t shown up in the first place.

Let’s not forget: Nepal remains on the EU aviation safety blacklist. Our aviation oversight system has long been flagged for shortcomings. And unless we fix the fundamentals (stronger regulation, better aircraft standards,) an independent CAAN even 100% FDI won’t change much.

Because let’s be honest: Nepal’s aviation story has had more turbulence than takeoffs. We’ve built airports that sit mostly empty. We’ve let old planes in and modern ones pass us by. We’ve waited for tourists who couldn’t get direct flights and airlines that never showed up.

This policy could change all that (if we don’t clip its wings ourselves.)

If implemented with the right reforms, it could finally give struggling flag carriers like Nepal Airlines the financial runway they’ve long lacked. And for newer players like Himalaya Airlines, it could mean modern fleets, expanded routes, and a real shot at competing internationally.

So if we get this right, we don’t just fix our flights, we build a future where Pokhara isn’t just a getaway, but a gateway. Where Nepal is known not just for mountains, but for mobility.

But if we get it wrong?

Then it’s just another high-flying idea grounded by the same old system.

The skies are open. The world is watching.
Now it’s Nepal’s move.

Additional Resources:

• Buying a Ghar? You Must Pay via Commercial Bank in Nepal
• How the Israel-Iran War Threatens Remittance in Nepal
• Khalti - IME Pay Merge, Nepal Rastra Bank Shuts Two Wallets
• Nepal Rastra Bank Finally Lets IT Companies Go Global