Nepal Tourism and Travel Sector Hit by Domestic Aviation Crisis as Skyrocketing Jet Fuel Costs Increase Flight Prices, Reduce Traveller Demand and Challenge Affordable Air Connectivity

Written By: Boby Dey

Boby Dey

A Passionate travel writer at Travel And Tour World with a strong interest in global tourism, destination storytelling, and the ever-evolving travel industry. Dedicated to creating well-researched, engaging, and informative content that highlights emerging travel trends, tourism developments, airline and hospitality news, cultural experiences, and must-visit destinations from around the world.

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July 23, 2026 11:57 GMT+5:30

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Nepal’s tourism and travel sector is experiencing increasing pressure as a domestic aviation crisis develops due to rapidly rising jet fuel costs, which have significantly increased airline operating expenses, driven up domestic flight prices and reduced affordable air connectivity across the country. The surge in aviation fuel costs has made air travel more expensive for both domestic and international travellers seeking to explore Nepal’s remote destinations, creating a direct impact on traveller demand, tourism accessibility and the movement of visitors between major gateways and regional attractions. As airlines face higher costs, maintaining competitive fares has become increasingly difficult, leading to concerns over reduced passenger volumes, weaker tourism spending and challenges for destinations that depend heavily on reliable domestic flights. The situation highlights the growing link between aviation affordability and Nepal’s tourism performance, as expensive air connectivity threatens to slow travel growth, limit access to mountain and heritage destinations and create additional obstacles for the country’s wider tourism expansion plans.

Nepal’s tourism and travel sector is facing a growing domestic aviation crisis as skyrocketing jet fuel costs push flight prices higher, reduce traveller demand and put affordable air connectivity under pressure. Domestic airlines recorded a major passenger decline during the fiscal year 2025–26, with more than 540,000 fewer travellers using domestic flights compared with the previous year.

The sharp downturn has been linked mainly to rising aviation fuel prices, which forced airlines to increase airfares by up to forty percent. The increase has affected ordinary travellers, domestic tourists and regional connectivity across Nepal, creating one of the most difficult periods for the country’s aviation industry since the pandemic recovery.

Nepal Domestic Air Passenger Numbers Fall by More Than 540,000 as Fuel Costs Rise

According to data from domestic airlines and the Civil Aviation Authority of Nepal (CAAN), Nepal’s domestic passenger traffic declined significantly during the fiscal year that ended on July 16, 2026.

Domestic airlines carried 4,016,880 passengers in fiscal year 2025–26, compared with 4,557,634 passengers in fiscal year 2024–25. The difference represents a loss of 540,754 passengers within one year.

Overall domestic passenger movement dropped by twelve percent, showing the direct impact of rising flight costs on travel behaviour across Nepal.

The decline became more severe during the final five months of the fiscal year when fuel price increases strongly affected ticket prices. Passenger numbers reduced by ten percent during the period from mid-February to mid-March.

The decline continued with a seventeen percent drop from mid-March to mid-April. The situation worsened between mid-April and mid-May, when passenger traffic decreased by thirty-three percent.

During the following month from mid-May to mid-June, domestic passenger numbers fell by thirty-four percent, while the final period from mid-June to mid-July recorded a twenty-nine percent decline.

Rising Jet Fuel Prices Create Major Pressure on Nepal’s Aviation Market

The biggest factor behind Nepal’s domestic aviation slowdown has been the sharp increase in jet fuel prices. Global energy market instability and geopolitical tensions have pushed aviation fuel costs higher, creating additional challenges for airlines.

Domestic carriers depend heavily on aviation fuel, which represents one of the largest operational expenses in the airline business. When fuel prices rise, airlines must adjust ticket prices to cover increasing costs.

The result has been a significant increase in domestic airfares, making flights less affordable for many Nepalese travellers.

Although airlines maintained regular flight operations during the first half of the fiscal year, the sudden rise in fuel costs changed passenger behaviour. Many travellers who previously preferred flights began choosing alternative transportation methods because of higher ticket prices.

The impact has been particularly strong among occasional domestic travellers who fly mainly for family visits, medical treatment, business activities and social responsibilities.

Major Nepal Airlines Experience Passenger Declines Amid Travel Slowdown

The passenger decline affected all major domestic airlines operating in Nepal.

Buddha Air experienced the largest reduction in passenger numbers. The airline lost approximately 394,000 passengers during the fiscal year, representing a fourteen percent decline compared with the previous year.

Despite the decrease, Buddha Air remained Nepal’s leading domestic airline with a 58.3 percent market share.

Yeti Airlines also faced a difficult period, losing 93,048 passengers during the same timeframe. The airline recorded a nine percent passenger decline while maintaining a market share of around 22.5 percent.

Shree Airlines showed comparatively stronger performance, recording a smaller decline of around six percent. However, the overall reduction in passenger demand affected the entire domestic aviation industry.

The decline across major carriers highlights how higher operating costs and expensive airfares have affected Nepal’s domestic travel ecosystem.

Rising Airfares Impact Domestic Tourism and Regional Connectivity

Nepal’s domestic aviation network plays a vital role in supporting tourism and connecting different regions of the country. Many destinations depend on regular flights to attract visitors and support local economies.

However, higher airfares have created challenges for domestic tourism. Travellers who previously selected flights for convenience are now reconsidering their travel plans because of increased costs.

Nepal’s domestic aviation market normally handles around four to four and a half million passengers every year. Among these travellers are foreign tourists, Indian visitors, government employees and local residents.

Around 300,000 foreign tourists use domestic flights annually, along with approximately 300,000 Indian visitors and nearly 100,000 employees from government and non-government organisations.

The largest passenger group consists of ordinary Nepalese citizens travelling within the country for personal reasons. These travellers often make one or two journeys annually for family meetings, medical needs or important social events.

Higher ticket prices have directly affected this group, reducing the number of people willing to travel by air.

Airports Across Nepal Record Declining Passenger Movement

The domestic aviation slowdown affected airports across Nepal, with passenger declines reported at several major locations.

Simara Airport recorded the largest reduction, with passenger traffic falling by twenty-four percent. Bhairahawa Airport followed with a twenty-two percent decline.

Pokhara Airport, one of Nepal’s most important tourism gateways, recorded an eleven percent reduction in domestic passenger movement.

Other airports also experienced significant declines. Nepalgunj Airport saw traffic fall by sixteen percent, Dhangadhi Airport declined by thirteen percent and Surkhet Airport recorded a fifteen percent decrease.

Rajbiraj Airport experienced a ten percent reduction, while Biratnagar and Bhadrapur airports each recorded seven percent declines.

Janakpur Airport saw passenger numbers decrease by six percent.

The widespread decline shows that rising flight prices affected both major cities and regional destinations, reducing domestic mobility across Nepal.

Nepal Aviation Industry Faces Growing Financial Challenges

Domestic airlines are facing increasing financial pressure due to multiple challenges beyond fuel costs.

Higher insurance premiums, expensive aircraft maintenance, rising spare parts costs and currency depreciation have added further pressure on airline operations.

A major challenge for Nepal’s carriers is the difference between revenue and expenses. Airlines earn most of their income in Nepalese rupees, while many aviation-related costs, including spare parts and certain payments, are linked to US dollars.

The weakening of the local currency has increased operational expenses and reduced financial flexibility for airlines.

The helicopter sector has also experienced difficulties, with flight hours declining by twenty to thirty percent among Nepal’s helicopter operators.

Nepal Airlines Seek Solutions to Protect Future Air Connectivity

Nepal’s domestic airlines have called for stronger support measures to address the ongoing aviation crisis.

Airline representatives have highlighted the need for solutions that can improve financial stability during periods of global economic uncertainty.

While aviation authorities continue to focus on safety standards and technical monitoring, airlines have raised concerns about the lack of support mechanisms addressing financial sustainability during major external shocks.

The current crisis demonstrates the importance of maintaining affordable domestic air connectivity for Nepal’s tourism sector, regional development and passenger mobility.

Nepal’s tourism and travel sector is facing a domestic aviation crisis as soaring jet fuel costs push up flight prices, reduce traveller demand and make affordable air connectivity increasingly difficult across key tourism destinations. The rising operational burden on airlines is directly affecting passenger movement, tourism accessibility and the country’s travel growth prospects.

With fuel prices remaining uncertain and operational costs continuing to rise, Nepal’s aviation industry faces a critical period ahead. The future of domestic travel will depend on how effectively airlines and authorities respond to rising costs while protecting affordable access to air transportation.