The Government of Nepal has proposed a comprehensive new law aimed at making domestic aviation travel safer, more reliable, and passenger-friendly by clearly defining the responsibilities and liabilities of domestic airlines. The Ministry of Culture, Tourism and Civil Aviation has drafted the Domestic Air Carrier Liability Bill, 2083, which introduces strict provisions requiring airlines to compensate passengers for flight delays, cancellations, baggage loss, cargo delays, and aviation accidents caused by the airline’s negligence. If enacted by Parliament, the legislation would significantly strengthen passenger protection while imposing stricter legal obligations on domestic airlines.
Passengers Entitled to Compensation for Aviation Disruptions
Under the proposed bill, domestic airlines will be legally obligated to transport passengers to their destinations within the scheduled time. If a flight is delayed, cancelled, or suspended due to the airline’s negligence, affected passengers will be entitled to compensation as prescribed by law.
The draft legislation also requires airlines to notify passengers at least three hours in advance if a flight is expected to be delayed or cancelled. Likewise, airlines will be required to provide compensation and other prescribed facilities if:
- A flight is cancelled due to the airline’s fault.
- Passengers are denied boarding because the airline sold more tickets than the aircraft’s seating capacity (overbooking).
Compensation for Air Crash Fatalities Increased Fivefold
One of the most significant provisions in the proposed legislation is the substantial increase in compensation for passengers killed in aviation accidents. The draft bill proposes that airlines must pay US$100,000 (more than Rs. 15 million) to the legal heirs of a passenger or a third party who dies in a domestic air accident. Currently, compensation is limited to US$20,000 under the 1929 Warsaw Convention and the 1955 Hague Protocol, which Nepal follows. If the bill becomes law, compensation coverage for domestic air passengers will increase fivefold, marking one of the most significant reforms in Nepal’s aviation sector.
Immediate Funeral Assistance of Rs. 500,000
The proposed law also requires airlines to provide Rs. 500,000 in immediate cash assistance to the victim’s family for funeral expenses following a fatal accident. The amount will later be adjusted against the total compensation payable under the law.
Compensation for Lost Baggage and Delayed Cargo
The bill introduces compensation for lost or damaged baggage as well. Passengers whose checked baggage is lost or damaged will receive compensation of US$20 per kilogram, subject to a maximum limit of US$500. Similarly, airlines will be liable to compensate customers if cargo is lost or delayed by more than three days. Cargo that remains undelivered for 15 days will legally be considered lost under the proposed legislation.
Mandatory Insurance for All Domestic Airlines
The bill makes comprehensive insurance coverage mandatory for every domestic airline operating in Nepal. Airlines must obtain insurance covering:
- Passengers
- Checked baggage
- Third-party liabilities
- War-related risks
- Terrorism-related incidents
Failure to maintain the required insurance could result in suspension of flight operations or cancellation of the airline’s Air Operator Certificate (AOC).
Heavy Fines for Violating the Law
The proposed legislation also introduces stringent financial penalties for airlines violating its provisions. Depending on the severity of the offence, airlines could face fines ranging from Rs. 10,000 to Rs. 2.5 million. For repeat violations, the draft bill proposes doubling the penalty amount.
Clear Complaint and Appeal Process
The bill establishes a formal mechanism for passengers seeking compensation. Passengers or their families must file claims:
- Within 90 days in cases involving death or permanent disability.
- Within 30 days for lost baggage.
Airlines will be required to issue a decision within 60 days of receiving the claim. If passengers are dissatisfied with the airline’s decision, they may appeal within 30 days to the Director General of the Civil Aviation Authority of Nepal (CAAN). Should the complainant remain dissatisfied with the Director General’s decision, the draft law allows an appeal to the concerned High Court within 35 days.
Exceptions to Airline Liability
The proposed law also specifies situations where airlines will not be required to pay compensation. These include delays or cancellations caused by:
- Severe weather
- Natural disasters
- Air traffic management restrictions
- Other circumstances beyond the airline’s control
Similarly, airlines will not be held responsible if a passenger suffers death or disability due to a serious pre-existing medical condition. The legislation will also not apply to aircraft operated by the Government of Nepal, the Nepal Army, or aircraft used for test flights.
Law to Take Effect 31 Days After Presidential Authentication
According to the draft, the law will come into force 31 days after receiving presidential authentication following its passage by the Federal Parliament. The bill also authorizes the government to review and revise compensation limits every 10 years based on inflation, ensuring that compensation remains relevant to changing economic conditions. The proposed legislation represents one of Nepal’s most ambitious aviation reforms in recent years, aiming to enhance passenger rights, improve airline accountability, and align domestic aviation standards with modern international practices.
