The government is preparing to fundamentally restructure debt-ridden Nepal Airlines and move the national flag carrier forward under a public-private partnership (PPP) model.

Minister for Culture, Tourism and Civil Aviation Khadgaraj Paudel has said the government is committed to bringing the private sector into the restructuring process. He said Nepal Airlines needs to be rescued through fundamental reforms and that he remains determined to move the airline under a PPP framework.

According to Minister Paudel, Nepal Airlines has been struggling with accumulated debt, administrative problems, political interference and bureaucratic hurdles. He said the airline requires fundamental restructuring rather than limited operational reforms.

The minister emphasized that private-sector participation would be essential for reviving the airline. He also argued that Nepal's tourism sector cannot reach its full potential without improving the national flag carrier.

Private Sector Calls for Strategic Partnership

The private sector has also been calling for a strategic partner to be brought into Nepal Airlines.

Federation of Nepalese Chambers? Wait no—Confederation of Nepalese Industries (CNI) President Birendra Raj Pandey has argued that the airline's limited fleet has prevented it from competing effectively with foreign carriers. He said this has contributed to high airfares and affected Nepal's tourism potential.

Pandey suggested that Nepal Airlines should increase its fleet and bring in a strategic partner to improve its management and competitiveness.

He also highlighted operational challenges at Pokhara International Airport and Gautam Buddha International Airport, arguing that specialized operating structures may be required for both airports.

Airport and Air Cargo Infrastructure Also Need Improvement

The private sector has also called for greater attention to air cargo infrastructure as Nepal's international trade expands.

With Nepal being a landlocked country, expanding air cargo services for high-value goods could support international trade. There are also concerns that Tribhuvan International Airport could face capacity constraints as passenger numbers continue to increase.

Government Targets Removal From EU Air Safety List

Meanwhile, Minister Paudel has claimed that the government is working to remove Nepal from the European Union's air safety list within six to seven months.

He said the government is in continuous discussions with relevant EU authorities and has given high priority to aviation safety reforms.

According to the minister, the government is preparing the final draft of legislation to separate the Civil Aviation Authority of Nepal's regulatory and service-provider functions. The bill is expected to address key institutional issues related to aviation safety once it is presented to Parliament.

Minister Paudel stressed that cooperation between the government and private sector will be essential for tourism development, aviation safety improvements and the restructuring of Nepal Airlines.