Nepal and Australia have been moving closer towards signing the first bilateral air service agreement (ASA) as Nepal Airlines wants to spread its wings Down Under after acquiring new long-range aircraft.

Civil Aviation Ministry officials said the Australian government had responded positively to the proposal, and sent its feedback on the draft ASA prepared by Nepal. 

“We are preparing to send our views to Australia,” said Pramod Nepal, under-secretary at the ministry. “Once both sides agree on a common agenda, the draft will be tabled at the Cabinet for its approval to sign the ASA,” he said. “Negotiations will begin after the Cabinet’s clearance.” 

Nepal added that the date and venue for signing the accord will also be finalised after the two sides agree on the items in the agreement. 

The ministry had requested the Australian government to allow 14 weekly flights with any type of aircraft. The Australian government has expressed willingness to permit seven weekly flights to key cities like Sydney, Melbourne, Brisbane and Perth, said Nepal. “It has proposed providing unlimited flights for other destinations.” 

Third country code-share agreement, fifth freedom traffic rights, multiple designations, free pricing and unrestricted cargo are other items proposed by Nepal in the air accord.

Nepal said that the new deal would be based on ‘the principal place of business’ rather than the traditional ‘principle of airline substantial ownership’. 

In many countries including India, a flight operation permit is granted only if a majority of the shareholders in an airline company are from the country where the firm is based. 

For example, Nepal-based airlines in which Nepali investors have a 51 percent or higher stake are allowed to operate flights to India. But if Nepali investors own less than 51 percent of the shares, such airlines will be automatically barred from flying to India.

Nepal’s foreign direct investment policy, however, allows foreign investors to hold up to 80 percent of the shares in an airline. 

The government had made a request to the Australian government as Nepal Airlines wished to link Australia after acquiring two long-range Airbus A330-200s which are scheduled to be delivered by the first quarter of 2018. According to a Nepal Air Traffic Analysis report prepared by Airbus in 2015, Australia is an emerging market. There were 41,000 one-way travellers between Australia and Nepal in 2014. The preferred route between Nepal and Australia is through Malaysia. 

“The number of Nepali students flying to Australia and Australian tourists coming to Nepal has been rising. This makes the route viable,” said Under-Secretary Nepal. 

North America, Japan and the UK are other emerging markets for Nepal besides Australia for the next 20 years, the report said.

Since 1963, Nepal has signed bilateral ASAs with 38 countries, New Zealand and Vietnam being the latest countries. This provides 6 million seats per annum to and from Nepal. However, less than 40 percent of this capacity is being utilized. Presently, 28 international airlines are operating flights from Kathmandu to 22 cities in Asia and Europe.