The Tourism Ministry is preparing to invite domestic airlines to submit open bids for international flying licences in a move to increase their market share on foreign routes.

A five-member government panel tasked to review the existing terms of reference (TOR) for domestic airlines to operate international flights submitted its report to the ministry on Monday. The TOR will be sent to the Cabinet for its approval after the ministry okays the proposed amendments, ministry officials said.

Subsequently, a 45-day notice will be issued inviting expressions of interest from prospective domestic airlines. “At least two passenger airlines and a cargo carrier will be granted licences after assessing their eligibility and required criteria.”

Under the existing rules, domestic airlines are required to have five years of domestic flying experience and three aircraft in their fleet to qualify to fly to foreign destinations. The temporary TOR, however, will allow domestic airlines to get the licence directly if they fulfil the requirements. The move was initiated after Shree Airlines applied to start international services.

The panel has also recommended amending the categories of international licences. The ministry normally issues licences for three categories of international airlines: A, B and C. Class A licences have been set for airlines whose flights last longer than three hours, Class B for flights lasting three hours, and Class C for those operating flights of less than three hours.

The revised TOR has suggested issuing class licences based on the aircraft’s weight. “Issuing licences based on the aircraft’s weight is more practical. The existing law also allows issuing aircraft type certificate on the basis of weight,” said an official at the Civil Aviation Authority of Nepal, the country’s aviation regulator. For example, a Class A licence can be issued for wide-body aircraft like the Airbus A330 and Boeing 777, Class B licence for narrow body jets like the A320 and Boeing 757, and Class C licence can be issued for aircraft like the ATR, CRJ and other small planes.

As per the revised TOR, Class A airlines are required to have a paid-up capital of Rs1.50 billion, Class B Rs1 billion and Class C Rs500 million. Likewise, airlines seeking a Class C category licence are required to possess at least three aircraft. A Class C licence holder has to increase its paid-up capital by Rs100 million for each aircraft it adds to the fleet beyond the mandatory requirement of three aircraft, ministry officials said.

As per a Cabinet decision, the TOR needs to be reviewed every three years. However, the government has not reviewed it since March 2010. The last time the government issued a licence to operate international flights was in 2011 to the now defunct BB Airways.

Shree Airlines had applied for a Class C licence. The carrier plans to link South Asian countries, particularly India and Bangladesh. It currently has three Bombardier Canadair Regional Jets (CRJs) in its fleet, and plans to add more aircraft after receiving an international flying licence.