2.2 To develop, expand, promote, and protect the only national flag carrier through the involvement of local or foreign joint venture investors for international air transportation services.

2.3 To develop healthy and competitive air transportation by encouraging the private sector.

2.4 To develop and expand airports in remote areas.

2.5 To make air transportation reliable and safe through the development of modern equipment and facilities at the airports.

2.6 To duly encourage recreational, adventure, and research-oriented air service facilities.

All services connected with safe, efficient, and regular operations or air transport and airports shall be declared "Essential Services." employees of governmental, semi-governmental, and non-governmental organizations and corporation and companies connected with air transport services, will not be permitted to participate in any type of strikes. Provisions concerning essential services will be specified in licenses and contracts, as well as in conditions of services connected with the air transport service.

3.2 Aeronautical Authority

The Department of Civil Aviation shall be the sole aeronautical authority of Nepal. The regularization, control, development, and expansion works pertaining to all matters concerning the aviation sector shall be carried out by the Department of Civil Aviation within the policies and guidelines adopted by the Ministry of Tourism and Civil Aviation.

3.3 Flight Safety

Emphasis shall be given to the additional installation of modern navigational aid equipment and for their proper maintenance at the Tribhuwan International Airport and other domestic airports. The Department of Civil Aviation and all airlines in operation must comply strictly with the safety regulations. With a view to discouraging the import and operation of very old aircrafts, the following policy shall be adopted:

1. The import of aircrafts which are more than 10 years old or which have exceeded 50 percent of the maximum flight hours or cycles prescribed by the manufacturers on the basis of economic design life and the operation of aircrafts which are more than 20 years old or which have exceeded 75 percent of the maximum flight hours or cycles prescribed by the manufacturers, is prohibited.
   
   
2. Those who operate in this provision for a period of three years are subject to the condition that they fulfill the requirements relating to air-worthiness prescribed by the Department of Civil Aviation.
   
   
3. Permission may be granted to operate an aircraft until the period as certified for air-worthiness by the manufacturer of the aircraft after the repair and maintenance works as determined by the Department of Civil Aviation.

3.4 Utilization of Air Space

International airlines companies shall be encouraged to make use of the Nepalese air space. In order to ensure the optimum use of the air space by international air-lines, emphasis shall be laid on increasing the number of international flights as well as the air safety of IFR flights.

3.5 Establishment of civil Aviation Authority

A Civil Aviation Authority shall be established to perform all functions being performed by the Department of Civil Aviation. Some functions shall be performed by His Majesty's government on its own, and the Civil aviation Authority will gradually be made self-reliant.

3.6 Traffic Rights

His Majesty's government shall actively engage in bilateral air service agreements in order to acquire new traffic rights on the basis of Nepal's development plans of international air service operations. Before the Department of Civil Aviation grants traffic rights to airlines of other countries for scheduled flights in and out of Nepal, it shall consult the RNAC and take into consideration the interests of the international airlines of Nepal. The traffic rights enjoyed by the RNAC shall be transferred to the new international airlines of Nepal.

3.7 Route Schedule

Air Service Agreements relating to route schedule shall be concluded on the basis of seat capacity. While signing bilateral air service agreements, His Majesty's Government shall endeavor to obtain traffic rights for two or more destinations for the international airlines of Nepal.

3.8 Airport Facilities

3.8.1 Cargo Complex: A cargo terminal complex shall be built at the Tribhuwan International Airport in order to improve the import, export, and transit cargo transportation.

3.8.2 Hanger/Maintenance: Appropriate hanger service facilities shall be developed at the Tribhuwan International Airport.

3.8.3 Flight Catering: A modern flight catering at the Tribhuvan International Airport shall be established.

3.8.4 Passenger's Facility Services: (a) Duty free shops shall be established in the International Airport Complex. (b) Limousine and transport services shall be operated from the Tribhuwan International Airport to the various places in the city for the convenience of the tourists visiting Nepal.

3.9 Domestic Airlines

3.9.1 Limited permission will be granted to aircrafts owned by the agencies of His Majesty's Government for making commercial flights.

3.9.2 In the case of domestic airlines, permission for new air service operators shall be granted in such a way that regional airports shall act as their base and air services will be operated in the remote areas subject to conditions prescribed by His Majesty's Government. This provision will also be applicable to any fleet expansion by the operators or airlines currently in operation.

3.9.3 Department of Civil Aviation shall conduct detailed evaluation studies every two years on the technical, economical, and social impacts of all domestic airlines currently in operation.

3.9.4 Operating permission shall be granted to new companies on condition that a helicopter services shall be required to employ Nepali citizens as employees (including pilots) and that fixed-wing aircrafts shall be required to employ Nepali citizens within a given period. A helicopter shall be required to fly above 3,000 feet while passing over highly sensitive areas. No aircraft shall fly over prohibited areas.

His Majesty's Government may declare any particular area as a prohibited area with or without fixing the time period thereof. While making an application for permission for registration of airline companies, it shall be essential that a concrete and reliable proposal on the management of employees and financial investment is submitted.

3.9.4.1 Approval may be granted by the cabinet only for the operation of passenger and cargo services on a charter basis by a Turbo-prop single engine aircraft in specific routes prescribed by the Department of Civil Aviation considering engine reliability specified by the manufacturer, international practices, availability of alternate aircraft, the flight sector, and the urgency of need.

3.9.5 Encouragement of recreational, adventurous and research-oriented air activities:

Recreational, adventurous and research-oriented air activities such as hang gliding, para gliding, para jumping or hot ballooning shall be encouraged.

3.9.6 Determination of Fare:

His Majesty's Government shall fix the air fare of each flight sector by prescribing the minimum and maximum range thereof. The Department of Civil Aviation may withhold the air operating certificate of any airline which fixes air fare in violation of the limits prescribed by His Majesty's Government.

3.9.7 If a Nepali citizen makes an application for obtaining permission to register and operate a private aircraft for his personal use, permission may be granted to such an applicant to own and operate aircraft on the condition that such a plane shall not have the right to make commercial flights.

3.9.8 Domestic airlines companies shall be required to make arrangements for the construction of its own hanger, parking areas, maintenance center, and training arrangements in conformity with the standards prescribed by the Department of Civil Aviation.

3.9.9 Airlines companies shall be required to make adequate arrangements for keeping in reserve aircraft spare parts, equipment and machinery.

3.9.10 Permission shall not be granted to lease aircrafts of private operators to any other country.

3.9.11 In case any airline fails to submit monthly and other periodic particulars to the Department of Civil Aviation or in cases there is doubt about the air worthiness of any airline, or if it violates any section of the Civil Aviation Act or rules, the Department of Civil Aviation may suspend the air operating license of the concerned airline at any time.

3.9.12 Flight schedules shall be approved only on the basis of the condition, standard and capacity of airports, the type and capacity of aircraft, and the performance of the airline operator.

3.9.13 Considering the geographically remote areas, the condition of transport and the difficulty of transportation of developmental construction activities, the domestic flight routes shall be classified as:

1. Operation areas where road transport facilities are available.
2. Operation areas where road transport facilities are not available.

3.9.14 If any national and foreign joint venture investors wish to open flying clubs, permission may be granted to such companies do so.

3.10 International Air Service

3.10.1 Aircrafts of international airlines need to have a high standard. They shall be selected and operated to minimize repair and maintenance costs as well as operating costs.

3.11 Bifurcation of the RNAC and Privatization:

In order for the Royal Nepal Airlines Corporation to move ahead with the times, it is observed that there is a need for increasing the number of reliable aeroplanes. It has to make its management more efficient and competent in order to compete with the private sector airlines in the domestic sector. RNAC will be divided into international and domestic services.

3.11.1 Royal Nepal Airlines (International) which is to be established as mentioned above shall operate its international flights as the sole flag carrier of Nepal.

3.11.2 His Majesty's government shall look for foreign airlines to be joint-venture partners. The airlines from the private sector currently in operation and other private investors shall also be invited to make investments on a priority basis.

3.11.3 RNAC will be developed in such a manner as to enable it to operate in competition with the private sector in the domestic air services.

His Majesty's government shall keep 51% of the shares of the RNAC (domestic), with the rest to be floated for private shareholders. In so distributing the shares, priority shall be accorded to the airline companies currently in operation. His Majesty's Government shall gradually reduce the portion of its share thereof.

3.12 Improvement and Extension of Airports

3.12.1 Tribhuwan International Airport will be expanded. It will be equipped with adequate skilled manpower, modern equipment such as radar will be installed.

3.12.2 Due regard shall be given to repair and maintain small airports located in remote areas. Such airports shall be gradually equipped with modern equipment.

3.12.3 Airports will be constructed in remote areas as per requirement. His Majesty's government will improve and develop airport on its own through public participation or through foreign support. It will use the build, own, operate, and transfer (BOOT) process. Such investors shall be given necessary facilities and encouragement (including the facility of land acquisition).

3.12.4 For the purpose of operating flights to remote areas, Biratnagar, Pokhara, Bhairahawa, Nepalgunj, and Dhangadi shall be developed as regional base Airports. For the purpose of making the optimum use of the capacity of the Tribhuwan International airport, and to develop Kathmandu as a regional hub for destinations outside the country, His Majesty's Government shall encourage airlines to increase their regular international air services to and from Nepal. Encouragement shall be given to operate domestic air services from regional base airports.

3.13 Production of Skilled Manpower

The Civil Aviation Training Centre presently functioning under the Department of Civil Aviation will be strengthened and expanded and thus made more capable of producing skilled manpower. Airline operators must also make appropriate arrangements for the training of manpower.

3.14 Charter Flights

His Majesty's Government shall, in consultation with the national flag-carrier, grant flight permission according to the need to operate passenger and cargo charter flights which can effectively help in the development of tourism in Nepal.