Nepal Domestic Aviation Traffic Drops by Over Five Hundred Thousand Passengers in 2026 Amid Skyrocketing Jet Fuel Costs and Forty Percent Fares Surge

SEO Title: Nepal Aviation Crisis: Passenger Traffic Drops 12% (2026)
Meta Description: Nepal's domestic aviation passenger volume fell by 12% in FY 2025-2026 due to skyrocketing fuel costs and a 40% rise in airfares.
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Standfirst: Skyrocketing jet fuel costs have triggered a severe domestic aviation crisis in Nepal, driving ticket prices up by 40% and leading to a drop of over 540,000 passengers during the 2025–26 fiscal year.

Widespread Passenger Volume Declines

A sharp rise in global energy prices and local currency depreciation has significantly impacted Nepal's domestic aviation sector.

According to data compiled by the Civil Aviation Authority of Nepal (CAAN), total domestic passenger traffic fell to 4,016,880 during the fiscal year ending July 16, 2026.

This represents a 12% decline compared to the 4,557,634 passengers carried in the previous fiscal year, resulting in a loss of 540,754 travelers. The decline accelerated during the final five months of the fiscal year, with passenger traffic dropping by 34% between mid-May and mid-June 2026.

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Airlines & Airport Performance Breakdown

• Buddha Air: Experienced the largest passenger loss, carrying 394,000 fewer travelers (a 14% drop), while retaining its position as the market leader with a 58.3% market share.
• Yeti Airlines: Suffered a 9% passenger decline (losing 93,048 travelers), holding a 22.5% market share.
• Shree Airlines: Recorded a minor passenger traffic decline of 6%.
• Simara & Bhairahawa Airports: Recorded the highest terminal passenger drops of 24% and 22%, respectively.
• Pokhara Airport (PKR): The key tourist gateway experienced an 11% drop in domestic arrivals.
• Helicopter Operations: Overall flight hours for Nepalese helicopter operators decreased by 20% to 30%.

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Passenger Rights & Tourism Overland Advisory (Information Gain)

As domestic flight prices soar, tourists and local residents must prepare for travel disruptions:

• CAAN Consumer Rights: Under CAAN regulations, if a domestic flight is canceled by the airline, passengers are entitled to a full ticket refund or free rebooking. However, airlines are not legally required to provide cash compensation for delays caused by weather or airport air traffic management.
• Overland Transport Alternative Risks: Due to expensive airfares, travelers are increasingly opting for road transport. However, Nepal's highways (such as the Prithvi Highway) are highly vulnerable to landslides, monsoonal washouts, and major travel delays, making early planning essential.
• Passenger Demographics: Nepal's domestic network typically processes 300,000 foreign tourists, 300,000 Indian visitors, and 100,000 government/NGO employees annually, alongside local citizens.

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Industry Analyst View

Our analysis indicates that Nepal's aviation crisis is worsened by a currency mismatch.

Domestic airlines generate their revenue in Nepalese Rupees (NPR), but must pay for aircraft lease agreements, maintenance checks, and imported spare parts in U.S. Dollars (USD). As the local currency weakens, operating costs rise. When combined with skyrocketing fuel prices, carriers are forced to increase fares, making domestic air travel unaffordable for middle-income local travelers.

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Data Tables

1. Nepal Domestic Passenger Volume & Airport Changes (FY 2025–26)

Parameter / Gateway	Previous Fiscal Year	Current Fiscal Year	Percentage Change (Year-on-Year)
Total Domestic Passengers	4,557,634	4,016,880	-12% (Loss of 540,754)
Buddha Air Volume	Lead Carrier	14% Loss	Retains 58.3% market share
Yeti Airlines Volume	Secondary Carrier	9% Loss (93,048 passengers)	Retains 22.5% market share
Simara Airport Traffic	Regional Hub	N/A	-24% passenger volume
Bhairahawa Airport Traffic	Regional Hub	N/A	-22% passenger volume
Pokhara Airport Traffic	Primary Tourism Hub	N/A	-11% passenger volume
Nepalgunj Airport Traffic	West Hub	N/A	-16% passenger volume

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Key Takeaways

• Massive Traffic Decline: Domestic passenger traffic in Nepal drops by 540,754 travelers.
• Ticket Prices Surge: Skyrocketing jet fuel costs drive domestic ticket fares up by 40%.
• Pokhara Traffic Down: Domestic flight volume at Pokhara tourism gateway falls by 11%.
• Helicopter Operations Slip: Charter flight hours drop by up to 30% across the country.

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FAQ

Why did domestic flight passenger volume drop in Nepal?

Passenger volume dropped by 12% due to skyrocketing jet fuel costs, which drove ticket prices up by 40% and forced travelers to choose alternative transport options.

How did Buddha Air perform during this aviation crisis?

Buddha Air lost approximately 394,000 passengers (a 14% decline) but remained Nepal's leading domestic carrier with a 58.3% market share.

Is road transport a reliable alternative to domestic flights in Nepal?

While cheaper, Nepal's overland road network is highly vulnerable to seasonal monsoonal weather, landslides, and road closures, which can cause severe travel delays compared to domestic flights.

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