Airlines company registration in Nepal is a two-layer process: a company is incorporated under the Companies Act, 2063 at the Office of the Company Registrar, and then an Air Operator Certificate (AOC) is obtained from the Civil Aviation Authority of Nepal (CAAN) under the Civil Aviation Act, 2053 and the Civil Aviation Regulations, 2058. Both layers are mandatory before a single commercial flight can operate.
Nepal's aviation market has grown steadily, with new international airports expanding capacity. Moreover, tourism recovery has increased demand for both domestic and international services. However, aviation is also the most heavily regulated industry in the country. Consequently, promoters must satisfy strict capital, ownership, aircraft, and safety requirements before approval is granted.
This guide explains the full airline company registration process in Nepal in plain language: capital requirements, foreign ownership rules, the AOC phases, aircraft rules, timelines, and common mistakes. Every fact has been checked against the Aviation Policy 2063, the Civil Aviation Regulations 2058, and current CAAN practice.
Legal Framework for Airlines Company Registration in Nepal
| Law / Regulation | Authority | What It Covers |
|---|---|---|
| Companies Act, 2063 (2006) | Office of Company Registrar | Company incorporation and governance |
| Civil Aviation Act, 2053 (1996) | Ministry of Culture, Tourism & Civil Aviation | Civil aviation policy and licensing |
| Civil Aviation Regulations, 2058 (2001) | CAAN | AOC, airworthiness, operations |
| Aviation Policy, 2063 (2006) | Government of Nepal | Capital, fleet, and investment rules |
| Foreign Investment and Technology Transfer Act, 2019 | Department of Industry | Foreign shareholding approval |
| Income Tax Act, 2058 / VAT Act, 2052 | Inland Revenue Department | Taxation of airline operations |
| ICAO Standards (Chicago Convention) | CAAN | International safety compliance |
Furthermore, Nepal is a member of the International Civil Aviation Organization (ICAO). Therefore, all regulations are aligned with ICAO standards, and audits are conducted regularly.
Minimum Capital Requirements for Airlines in Nepal
The capital rules are the biggest barrier for most promoters. Under the Aviation Policy 2063, minimum paid-up capital was originally set at NPR 150 million for domestic airlines and NPR 500 million for international airlines. However, the Civil Aviation Regulations were amended in 2018, and the requirements were significantly raised.
Current requirements are summarized below:
| License Class | Aircraft Type (MTOW) | Minimum Paid-up Capital |
|---|---|---|
| Class A | Over 125 tonnes | NPR 1 billion |
| Class B | Over 40 tonnes | NPR 750 million |
| Class C | Under 40 tonnes | NPR 500 million |
| Flying school | Training aircraft | NPR 100 million |
| Maintenance (MRO) | Repair organizations | NPR 50 million |
| Aviation sports | Adventure aviation | NPR 10 million |
Additional rules apply:
- For domestic scheduled operators, a minimum of three aircraft is required.
- At least one aircraft must be owned by the airline (not leased).
- At least one aircraft must be capable of operating at remote/regional airports.
- Paid-up capital must be increased by NPR 100 million for each additional aircraft beyond the mandatory three.
Foreign Ownership Rules for Airlines in Nepal
Foreign investment is permitted in aviation, but ownership caps apply under the Aviation Policy 2063 and FITTA, 2019.
| Segment | Maximum Foreign Ownership |
|---|---|
| International airlines | Up to 80% |
| Domestic airlines | Up to 49% |
| Flying schools | Up to 95% |
| Repair and maintenance (MRO) | Up to 95% |
Moreover, effective control of domestic airlines must remain with Nepalese nationals. Consequently, a foreign investor can hold a large stake in an international carrier, but domestic operations require Nepali majority control.
Additionally, promoters must not be in arrears to the Government of Nepal, CAAN, or any government-owned organization. Furthermore, they must not be blacklisted by Nepal Rastra Bank.
Prior FDI approval from the Department of Industry is required before foreign capital is injected. A minimum investment threshold (generally NPR 20 million) applies under FITTA, along with investment of USD 5 million or more unlocking residential visa facilities for expatriate staff under the Aviation Policy.
Step-by-Step Airlines Company Registration Process in Nepal
The full process typically takes 6 to 12 months, sometimes longer. Each stage is explained below.
Step 1: Incorporate the Company at OCR
Firstly, a private or public limited company is registered through the CAMIS portal at camis.ocr.gov.np. Name reservation, MOA/AOA drafting, and filing follow the standard process and take 7 to 10 working days.
The MOA objects must clearly state "air transport services" or the relevant aviation activity. Moreover, the capital structure must be designed to match the licensing class chosen.
Step 2: Obtain Initial Approval from the Ministry
Secondly, a letter of intent is submitted to the Ministry of Culture, Tourism and Civil Aviation (MoCTCA). A brief outline of the business plan, proposed routes, and fleet is included.
Step 3: Complete Tax and Business Registrations
Thirdly, the standard registrations are completed:
- PAN registration with the Inland Revenue Department
- VAT registration (air transport is taxable; international transport benefits from VAT zero-rating provisions)
- Municipal trade license
Step 4: Submit the Detailed Application to CAAN
Fourthly, a comprehensive application is filed with CAAN, including the detailed business plan, five-year financial projections, proposed fleet and route network, management structure, key personnel CVs, operations manual, safety management system, security program, emergency response plan, and insurance plans.
Step 5: Undergo the Air Operator Certificate (AOC) Process
The AOC is the heart of airlines company registration in Nepal. It is issued by CAAN in phases and involves:
- Document evaluation of manuals and systems
- Demonstration of financial capacity (paid-up capital deposited in a commercial bank)
- Recruitment and certification of key personnel (Accountable Manager, Director of Operations, Chief Pilot, Chief Engineer, Safety Manager)
- Inspection of facilities, offices, and maintenance arrangements
- Proof and validation flights
- Final certification issuance
Step 6: Acquire and Register Aircraft
Once the AOC process advances, aircraft are acquired through purchase or lease. CAAN approval is required for lease agreements.
Aircraft rules under the Aviation Policy include:
- Pressurized aircraft older than 15 years cannot be imported
- Non-pressurized aircraft older than 20 years are generally prohibited
- Aircraft must be registered in Nepal (registration mark prefix 9N)
- A Certificate of Airworthiness must be issued for each aircraft
Step 7: Obtain Route Approvals and Final Licenses
Route licenses are applied for based on the airline's proposed network. Domestic routes are approved by CAAN, while international routes depend on bilateral Air Service Agreements (ASAs) between Nepal and the destination country.
Step 8: Commence Operations
Finally, after all certificates, registrations, and route approvals are in place, commercial operations begin. Slot allocations at Tribhuvan International Airport and the new international airports are coordinated with CAAN and the airport operator.
Documents Required for Airline Registration in Nepal
| Category | Key Documents |
|---|---|
| Corporate | Company registration certificate, MOA/AOA, shareholder list, board resolutions |
| Financial | Paid-up capital proof, bank statements, five-year projections, funding evidence |
| Personnel | CVs and licenses of accountable manager, operations director, chief pilot, chief engineer |
| Operations | Operations manual, minimum equipment list, route manuals |
| Safety | Safety Management System manual, emergency response plan |
| Security | Security program approved per ICAO Annex 17 |
| Aircraft | Lease/purchase agreements, airworthiness certificates, registration documents, insurance policies |
| Insurance | Passenger, hull, and third-party liability coverage (third-party liability minimum of USD 60 million is applied in practice) |
Timeline and Cost Overview
| Stage | Typical Duration |
|---|---|
| Company incorporation | 7 – 10 working days |
| Ministry initial approval | 2 – 4 weeks |
| CAAN application and evaluation | 2 – 4 months |
| AOC phases (documentation to validation flights) | 3 – 6 months |
| Aircraft registration and airworthiness | 1 – 3 months |
| Route approvals | 1 – 2 months |
| Total | 6 – 12 months |
The professional and regulatory cost varies widely based on fleet size and license class. Moreover, aircraft acquisition or lease deposits form the largest expense — typically tens of millions of dollars.
Ongoing Compliance for Airlines in Nepal
After registration, continuous compliance is monitored by CAAN:
- Annual renewal of the AOC with continued surveillance
- Regular safety audits and inspections
- Financial reporting to CAAN and the IRD
- Monthly VAT and periodic income tax filings
- Annual return and AGM at OCR
- Maintenance records per approved programs
- Mandatory insurance renewals
- Compliance with remote-area service obligations (or contribution to the Remote Area Air Service Operation Fund)
Failure to maintain compliance can result in suspension or revocation of the AOC. Therefore, a dedicated compliance team is essential from day one.
Common Mistakes to Avoid
- Underestimating capital requirements – The 2018 rules made entry far costlier than many promoters expect.
- Wrong license class selection – The paid-up capital varies sharply by aircraft weight category.
- Weak management team – CAAN requires qualified, certificated key personnel, not just investors.
- Leasing without approval – Every lease agreement must be pre-approved by CAAN.
- Ignoring foreign ownership caps – Domestic airlines must remain Nepali-controlled.
- Buying old aircraft – The 15/20-year age limits eliminate many cheap second-hand options.
These risks can be managed when an aviation law specialist structures the project from the start. Furthermore, early engagement with CAAN prevents costly redesigns later.
Why Choose Attorney Nepal Pvt Ltd
At Attorney Nepal Pvt Ltd, aviation projects are handled by lawyers with regulatory experience before CAAN and the Ministry. The following services are provided end-to-end:
- Company incorporation with aviation-ready MOA/AOA
- FDI approval for foreign aviation investors
- AOC application preparation and CAAN liaison
- Aircraft lease agreement drafting and approval processing
- Route licensing and Air Service Agreement consultation
- Annual compliance and audit coordination
- Insurance and liability structuring
Call to Action: Launching an airline is one of the most complex registrations in Nepal. Contact Attorney Nepal Pvt Ltd for a free consultation and a structured roadmap for your airlines company registration in Nepal.
Disclaimer
This blog is published for general educational purposes only. It does not constitute legal advice. Aviation regulations, capital requirements, and procedures in Nepal are revised from time to time and may change. For advice tailored to your aviation project, please consult a licensed attorney at Attorney Nepal Pvt Ltd. No attorney-client relationship is created by reading this content.
References
- Civil Aviation Authority of Nepal (CAAN) — https://caanepal.gov.np
- CAAN e-AIP Nepal (Aeronautical Information) — https://e-aip.caanepal.gov.np
- National Aviation Policy, 2063 (2006) — https://caanepal.gov.np
- Civil Aviation Act, 2053 — Nepal Law Commission — https://lawcommission.gov.np
- Civil Aviation Regulations, 2058 — Nepal Law Commission — https://lawcommission.gov.np
- Office of the Company Registrar — https://ocr.gov.np
- Department of Industry (FDI Approval) — https://doi.gov.np
- Ministry of Culture, Tourism and Civil Aviation — https://tourism.gov.np
- International Civil Aviation Organization (ICAO) — https://www.icao.int
- Inland Revenue Department, Nepal — https://ird.gov.np
Questions
How much capital is needed for airlines company registration in Nepal?
Under the 2018 Civil Aviation Regulations, minimum paid-up capital is NPR 500 million (Class C, aircraft under 40 tonnes MTOW), NPR 750 million (Class B), and NPR 1 billion (Class A, over 125 tonnes).
How long does the process take?
The full process typically takes 6 to 12 months, depending on application completeness, AOC phases, and aircraft readiness.
Can foreigners own an airline in Nepal?
Yes. Foreign ownership of up to 80% is allowed in international airlines and up to 49% in domestic airlines. Effective control of domestic carriers must remain with Nepalese nationals.
What is an Air Operator Certificate (AOC)?
The AOC is the core operating certificate issued by CAAN after a phased evaluation of documentation, finances, personnel, facilities, and validation flights. No commercial flight is permitted without it.
How many aircraft must a domestic airline have?
A domestic scheduled operator must have at least three aircraft, of which at least one must be owned by the airline and one must be capable of operating at remote airports.
Are there aircraft age limits?
Yes. Pressurized aircraft older than 15 years and non-pressurized aircraft older than 20 years cannot be imported under the Aviation Policy 2063.
Is a company registration at OCR enough to start flying?
No. OCR registration only creates the company. The AOC, aircraft registration, airworthiness certificates, and route licenses from CAAN are additionally required.
What taxes apply to airline operations?
Corporate income tax applies at 25%, with VAT at 13% on domestic tickets. International transport is generally zero-rated for VAT. TDS and other standard obligations also apply.
Can aircraft be leased instead of purchased?
Yes. Dry leases, wet leases, and ACMI arrangements are permitted with CAAN approval. At least one aircraft in a domestic scheduled fleet must still be owned.
What happens if an airline stops complying?
CAAN can suspend or revoke the AOC. Moreover, arrears to the government or blacklisting by Nepal Rastra Bank disqualifies promoters from holding aviation licenses.
This article is for general informational purposes only and does not constitute legal advice. For advice on your specific situation, please contact Attorney Nepal directly.
