Govt mulls raising compensation for airlines victims up to five times higher to USD 100,000
Kathmandu / Aug 2: The government is considering making airline service providers more responsible to ensure air travel safer, more reliable and more passenger-friendly for the air travelers, with enacting strict rules in the sector.
The government through its proposed new Domestic Air Carrier Liability Act, 2026, is requiring airlines to compensate passengers for flight delays, cancellations, lost or damaged baggage, and accidents caused by the airline’s negligence. The airline companies in this regard will be made both financially and legally liable in cases of flight delays, cancellations, accidents, loss or damage to baggage, among others.
The proposed bill has been registered at the Federal Parliament by the Ministry of Culture, Tourism and Civil Aviation. Under the bill, airlines could be liable for up to US $100,000 in compensation in the event of a passenger’s death, while lost or damaged checked baggage would be compensated at US $20 per kilogram, up to a maximum of US $500.
Airlines would also be required to inform passengers of delays or cancellations at least three hours in advance and maintain mandatory insurance covering passengers, baggage, cargo, and third-party liabilities. However, compensation would not apply if flight disruptions are caused by factors beyond the airline’s control, such as bad weather, natural disasters, or air traffic restrictions.
Accordingly, airlines will have to safely transport passengers who have purchased tickets to their destinations on the scheduled date and time.
Transparency has also been made mandatory in ticket sales. Airlines will have to separately state fare, airport service charges and government taxes on tickets. Failure to disclose details will be considered an offence.
In the event of the death of a passenger or a third party in an accident, the next of kin of the deceased will receive compensation of Nepali rupees equivalent to US $100,000.
At least US $500,000 will have to be made available immediately for funeral expenses when the body is handed over. This amount will be adjusted from the final compensation.
Earlier, the maximum compensation limit for death or injury to a passenger in an air accident was US $20,000 as per the Warsaw Convention of 1929 and the Hague Protocol of 1955.
It is also proposed that the airline company will bear the entire medical expenses of passengers or third parties injured in an accident. In case of dismemberment or other physical damage, a maximum compensation of US$100,000 will be provided.
If the baggage entrusted by the passenger is lost, destroyed or damaged, compensation will be paid up to a maximum of US $500 at the rate of US $20 per kilogram.
The company’s liability has also been clarified in cargo transportation. If the cargo is lost or damaged, the value will be equal to the declared value if it is declared, and in the case of undeclared cargo, compensation will be paid at the rate of US $10 per kilogram.
“If the cargo is not delivered within the specified time or is delayed by more than three days, compensation will be paid. If the cargo is not received even after 15 days, it is considered lost.”
Every airline company is required to have compulsory insurance covering passengers, cargo, third parties, war, terrorist activities and rescue operations. If the specified insurance is not provided, the regulatory body may instruct to obtain insurance within 35 days. Provided the insurance is not provided even during the stipulated period, the airline companies may be barred from conducting flight and the Airline Operating Certificate (AOC) may be canceled.
The proposed bill has also tightened the provision for fines for violations. An airline company that does not disclose details on the ticket, does not provide flight information on time, or does not provide the specified compensation can be fined from Rs 10,000-50,000.