The Secretary of the Department of Transport is the Licensing Authority for Domestic Air Service Licences. This category of license is issued under Part X- DOMESTIC AIR SERVICES of the Civil Aviation Act 2000 (as amended) and is valid for a minimum period of 12 months and a maximum period of 24 months.

The domestic market is fully deregulated meaning airlines may use an aircraft of their choice on all domestic aviation routes subject to compliance and certification with CASA PNG in regards to safety, NAC and PNGASL in regards to compatibility with PNG's airport and airways infrastructure.

Domestic airlines are allowed to operate foreign-registered air crafts for six months only and after which the aircraft must leave the country. In any case, the foreign-registered aircraft are not permitted to remain in Papua New Guinea for periods exceeding 12 months. After 12 months the aircraft must either be placed on the PNG (P2) register or be exported.

All air operators in the domestic market, except for those permitted on a temporary basis, must be a majority (51%) PNG citizen-owned.