Restructure CAAN To End Dual Role

The Civil Aviation Authority of Nepal (CAAN) is essential for an effective and safe operation of the nation's aviation sector. However, because of its dual function as a service provider and a regulator, a special issue has emerged. The complexity of this conundrum, potential conflicts of interest, and ramifications for Nepal's aviation industry are examined in this article. Civil aviation authorities are often established to govern and control the aviation sector by establishing safety standards, providing licenses, and monitoring compliance. However, CAAN also offers a number of aviation-related services in the country, such as flight navigation, airport management, and air traffic control. Concerns regarding potential conflicts of interest and objectivity in regulatory judgments are brought up by this duality.

A civil aviation regulator's main responsibility is to guarantee the security and safety of aviation operations. To prevent accidents and incidents, regulatory organisations must implement high standards, carry out audits, and monitor compliance. Questions concerning an aviation authority's ability to maintain strict monitoring and objectivity arise when it acts as a service provider. The worry is that regulatory choices can be influenced by the need to sustain service revenue.

Conflict of interest

The inherent conflict of interest in the dual function issue is a crucial component. The authority's financial interests as a service provider may conflict with regulatory choices made in the interest of safety. Transparency, accountability, and public trust are all crucial components of an effective regulatory environment, yet they are all undercut by this contradiction. The possibility of conflicts of interest is one of the key issues brought on by CAAN's dual duty. As a service provider, CAAN might put its own financial and operational interests ahead of those of others, which could occasionally conflict with its obligations as a regulator to uphold safety and fair competition. For instance, CAAN's own financial success as a service provider might have an impact on decisions regarding the construction of airport infrastructure.

In order for regulation to be effective, CAAN must be fair and open. There may be concerns about CAAN's independence when the same organisation is in charge of both the provision of services and their regulation. Fair and consistent laws that put the public interest ahead of financial gain are essential for the safety and expansion of the aviation sector. The aviation industry in Nepal has been steadily growing, drawing both domestic and foreign firms. It is critical that CAAN's interests as a service provider are not taken into account when making regulatory decisions in order to maintain a healthy and competitive market. If new entrants feel there aren't any level playing fields, this situation can put them off.

In many nations, the civil aviation authority only performs regulatory duties, leaving other organisations in charge of providing services. By ensuring clearer lines between regulation and operation, this separation reduces possible conflicts of interest and increases openness. Nepal also needs to think of changing the functions of CAAN to handle the conflicts. Separate organisations for regulatory, monitoring and service delivery could be established to help prevent conflicts of interest and advance a more open and competitive aviation sector. A step like this would bring Nepal's practices into line with the world's best practices and promote the security and development of the industry.

A proposed Civil Aviation Bill, 2076 (2021) seeks to modernise the nation’s civil aviation industry. The measure was initially presented to parliament in 2021, and on August 2, 2021, the National Assembly approved it. However, the session of the House of Representatives has come to a close, making the law obsolete. The Nepal Civil Aviation Authority (NCAA), which would be in charge of regulating and overseeing civil aviation in the country, would be created as a result of the proposed legislation. 

Bill still pending

The current CAAN, which has been under fire for corruption and inefficiency, would be replaced by the NCAA. The Nepal Civil Aviation Safety Board (NCSB), which would be in charge of looking into aviation accidents and events, is another proposal made in the law. The National Transportation Safety Board (NTSB) in the United States would serve as a model for the NCSB. When the Civil Aviation Bill, 2076 (2021), will become a law is unknown. Since the House of Representatives session ended while the measure was still pending, the government's efforts to reform the aviation business have proven problematic. The administration has promised to pass the legislation, but it is not yet clear when this will happen.

CAAN faces a difficult issue because of its dual function as a service provider and a regulator. For the aviation sector to grow sustainably, the proper balance between meeting its requirements and guaranteeing impartial regulation must be struck. The nation can overcome this challenge and establish a more open, secure, and competitive aviation environment by embracing international best practices and reorganising its functions.

(The author is an advocate.)