Domestic airlines in Nepal have experienced substantial growth over the past decade. Alongside the construction and upgrading of domestic airports, airlines have expanded their fleets with new aircraft. In the last 10 years, some new entrants in the airline industry have become well-established, while others are struggling to survive in Nepal’s competitive skies. The aviation sector has undergone significant transformation, with certain airlines setting new standards in the industry.
In the international sector, alongside Nepal Airlines, Himalayan Airlines emerged as a new player, operating flights to various international destinations from Nepal. Despite its long-standing presence, the national flag carrier, plagued by poor management and corruption, has yet to reverse its declining fortunes.
Changing landscape
In the late 1990s and early 2000s, there were few airlines in operation, such as Cosmic and Necon Airlines, apart from Nepal Airlines. However, they failed to sustain themselves and eventually disappeared from the market. Among the private airlines, Buddha Air has been a standout, redefining safety, service, and stability in domestic aviation. With consistent growth, Buddha Air has reached significant milestones in its 27-year journey.
Buddha Air operates a fleet of three ATR 42 and 15 ATR 72 aircraft. To cater to pilgrims, the airline has connected Varanasi (India) and Pashupatinath (Kathmandu). Executive Chairperson Birendra Bahadur Basnet has shared plans to expand routes to nearby Indian and Chinese cities from Pokhara Regional International Airport in the medium term, and to enhance air connectivity in mountainous regions by adding Cessna SkyCourier planes to the fleet.
Shree Airlines, initially a helicopter operator, entered the market with fixed-wing operations using Bombardier Canadair Regional Jets (CRJs) in May 2017. Currently, its fleet includes six Dash 8-Q400s, two Bombardier CRJ200, and two Bombardier CRJ700 aircraft.
Nepal Airlines, on the other hand, operates just one Twin Otter aircraft. Its domestic fleet, which includes two MA 60, two Y12, and two Twin Otters, remains grounded, except for the one operational Twin Otter, according to Manoj Kumar Shah, spokesperson of Nepal Airlines.
Yeti Airlines is another well-established domestic carrier, with seven ATR 72-500 aircraft in its fleet. In 2009, Yeti Airlines spun off its STOL (short takeoff and landing) operations, branding them as Tara Air, which provides extensive connectivity in Nepal’s mountainous regions.
Simrik Airlines, owned by Capt. Rameshwor Thapa, sold its two Dornier and two Beechcraft fixed-wing aircraft to Guna Airlines and now operates helicopters exclusively. Guna Airlines and Saurya Airlines are two newer players in the airline business.
Saurya Airlines operates one Bombardier CRJ200 after a tragic air crash at Tribhuvan International Airport on July 24, which claimed 18 lives, excluding the captain. Guna Airlines’ current fleet comprises five Jetstream-41 and two Beechcraft 1900 C aircraft.
In addition, Sita Air and Summit Air continue to provide STOL flights to remote mountain locations.
In the helicopter sector, alongside long-standing players such as Simrik, Dynasty, Fishtail, Annapurna, Altitude Air, Manang, Mountain, Shree, Mustang, and Heli Everest, newer entrants like Kailash and Prabhu are offering both passenger and cargo services in an increasingly competitive market.
Over the last decade, as air passenger numbers have surged, both new airlines have entered the market, and established players have expanded their fleets.
Airports and facilities
With the installation of runway lights at several airports in the Terai region, seven domestic airports now handle night flights. Bhadrapur, Janakpur, Nepalgunj, Dhangadhi, Bhairahawa, Simara, and Biratnagar are now equipped to operate after dark. Additionally, since 2019, the area navigation (RNAV) operations system has been introduced, further improving safety and efficiency.
The Pokhara Regional International Airport has also become operational, though it currently handles only domestic flights as no international commercial flights are being conducted. These airports in the southern plains also serve as gateways to the hilly regions.
According to the Civil Aviation Authority of Nepal (CAAN), the aviation regulator, the RNAV technology has minimised the chances of flight cancellations due to bad weather or low visibility, while also enabling night operations. Previously, the lack of such technology meant domestic airlines had to halt operations after 5 PM.
However, the government has constructed several airports across the country without assessing their viability, often as political gestures to attract voters. Out of 52 airports nationwide, 20 remain non-operational due to a lack of passengers. According to a senior source at CAAN, more than 1.5 billion rupees have been spent over the past decade constructing airports that are economically unviable.
Safety concerns
Safety remains a major concern in Nepal’s aviation sector, with frequent fatal crashes negatively impacting tourism and investment. These crashes have raised questions about CAAN’s regulatory capacity. There is growing concern that CAAN, acting both as regulator and service provider, is failing to properly oversee the sector. Airlines are expected to self-regulate and prioritise safety, but fierce competition sometimes leads to compromises, making stricter regulation necessary, according to Udaya Shumsher Rana, a member of parliament. He expressed doubts about CAAN’s ability to implement necessary reforms.
In December 2013, the European Union blacklisted Nepal’s civil aviation sector over concerns about the country’s oversight of its airlines, banning Nepali airlines from EU airspace. CAAN officials argue that the EU’s demand for separating CAAN’s regulatory and service-provider roles is politically motivated. However, the EU maintains that the issue extends beyond a mere separation of functions and involves several safety concerns that CAAN must address.
An EU assessment mission recently visited Nepal and stressed the importance of a clear distinction between the service provider and the regulator. “Independence in decision-making and action is crucial, whether achieved through functional separation or a legislative act enforcing a split,” said the EU. Nepal’s Ministry of Culture, Tourism, and Civil Aviation has announced plans to initiate legal, institutional, and procedural reforms to enhance aviation safety and restore credibility, ensuring safer services.
Moreover, the high frequency of air crashes has driven up aviation insurance premiums. “Though premiums are set by the international market syndicate, the high crash rate may make reinsurers reluctant to cover Nepali airlines,” said Chunky Chhetry, Chief Executive Officer of SALICO Insurance Company. “Four fatal air crashes in just 15 months have caught the attention of reinsurers.”
SALICO, which insures nine airlines, recently hosted the ‘Aviation Risk Management Conclave 2024’ on September 30, inviting international experts to provide insights to airline operations heads on minimising risks. Chhetry added, “Currently, insurance companies pass 95% of the risk to reinsurers, with the remaining 5% retained by local reinsurers and the insurance company itself. Previously, only 0.5% was retained.”