Due to the joint military action by Israel and the United States in Iran, the sharp rise in fuel prices has caused Nepal’s domestic aviation sector to lose nearly 550,000 passengers in the recently concluded fiscal year.

According to data collected by airline operators, after the increase in aviation fuel prices led to airfares rising by up to 40 percent, the number of passengers on Nepali domestic flights fell by 540,000 in fiscal year 2082/083. According to the Civil Aviation Authority’s statistics, compared to the previous fiscal year 2081/082, the total number of domestic air passengers in the recently concluded fiscal year decreased by 12 percent.

Numerically, while 4,557,634 people flew last year, this year the number of passengers dropped by 540,754, limiting the total to 4,016,000. Monthly data shows a sharp decline in passenger numbers in the final months of the fiscal year (from Falgun to Asar). According to Yuvraj Bista, Chief Business Officer of Yeti Airlines, a member of the Airlines Operators Association, the direct impact of the international fuel crisis and resulting price hikes was felt during this period.

Compared to the previous year, the number of domestic passengers fell by 10 percent in Falgun, 17 percent in Chaitra, 33 percent in Baisakh, 34 percent in Jestha, and 29 percent in Asar. In the first six months of the fiscal year (Shrawan–Poush), however, the number of flights was about the same as or only slightly less than previous years. But after fuel prices soared, the resulting high airfares led ordinary people and domestic tourists to cut back on air travel, as shown in the data.

The three major airlines that hold the largest market share (Buddha Air, Yeti Airlines, and Shree Airlines) all saw contractions in their business. Currently, in Nepal, the fixed-wing airlines in operation are Buddha Air, Yeti Airlines, Shree Airlines, Nepal Airlines Corporation, Summit Air, Tara Air, and Sita Air.

The largest decline in the industry was seen at Buddha Air. The company lost 394,000 passengers (14 percent), which accounts for about 73 percent of the total passenger decline in the entire aviation sector. Nevertheless, with a 58.3 percent market share, Buddha Air still holds the top position in domestic flights. Yeti Airlines lost 93,048 passengers (9 percent), maintaining a 22.5 percent market share. Shree Airlines, however, appeared comparatively more stable during this crisis, with a decline of 6 percent.

Regarding this major downturn in the aviation sector, Airlines Operators Association President Pratap Jung Pandey said that Nepali airlines are under serious financial pressure. “This is the second biggest crisis faced by Nepali airlines after the COVID pandemic,” President Pandey told Kantipur on Wednesday. “Many airlines’ balance sheets are negative. Some are even struggling to survive.”

According to President Pandey, due to the rise in the value of the dollar and the depreciation of the Nepali rupee, companies’ operating costs have increased sharply. “Fuel prices remain high and unstable. The fees that airlines pay to the Civil Aviation Authority of Nepal are in dollars. The cost of aircraft spare parts is also in dollars. But our transactions are only in Nepali rupees,” he added.

Pandey, who is also an operator of Kailash Helicopter, said that not only fixed-wing aircraft but also the helicopter sector has been badly affected. This year, helicopter business and flight hours have decreased by at least 20 to 30 percent. There are 11 helicopter companies in Nepal.

Due to the increase in airfares, passenger traffic has decreased at most of the country’s major airports. Among Nepal’s main industrial and tourism hubs, passenger numbers in Bhairahawa fell by 22 percent, and Simara saw the highest decline at 24 percent. In the main tourist destination Pokhara, passenger numbers dropped by 11 percent, while Nepalgunj, considered the gateway to Karnali and Sudurpaschim, saw a contraction of 16 percent. Similarly, Dhangadhi saw a 13 percent decline, Biratnagar and Bhadrapur 7 percent each, Janakpur 6 percent, Surkhet 15 percent, and Rajbiraj 10 percent.

While almost all airports in the country saw declines, Biratnagar’s passenger numbers remained almost stable compared to the previous year. According to airline operators, Nepal’s domestic air market has 4 to 4.5 million annual passengers, of which about 300,000 are foreigners and about 300,000 are Indian passengers. Similarly, about 100,000 are NGO staff and employees who regularly use air services.

“The remaining approximately 3.9 million passengers are Nepalis who travel once or twice a year to Kathmandu for family visits, medical treatment, and other social reasons,” Bista said. “This time, due to the Iran war and the resulting increase in airfares, those who would travel once or twice a year did not fly. Another point is that after political changes, the number of party leaders and activists traveling to Kathmandu, as used to happen before, has also decreased, as shown in the daily market analysis data of domestic airlines.”