Nepal's domestic airlines lost 540,000 passengers as fuel costs pushed up fares
Passenger numbers fell 12% in 2025/26 after jet fuel prices almost doubled and fares rose by up to 40%, leaving several carriers with negative balance sheets, their association says.
Nepal's domestic airlines carried 540,754 fewer passengers in the 2025/26 fiscal year than the year before, as the jet fuel shock from the war in the Gulf passed through to ticket prices. Passenger numbers fell from 4,557,634 to 4,016,880, a decline of 12%, The Kathmandu Post reported in July. Kantipur reported the same loss of about 540,000 passengers.
How fuel reached the fare
The trigger was the cost of aviation turbine fuel. On 31 March Nepal Oil Corporation raised the price for domestic flights from Rs 127 a litre to Rs 251, an increase of about 98%, ShareSansar reported. International jet fuel at Kathmandu rose from $966 to $1,785 a kilolitre.
Airlines pass fuel costs to passengers through a surcharge set by the Civil Aviation Authority of Nepal (CAAN). Fares rose by up to 40%, The Kathmandu Post reported. Prices have since moved in both directions. In early July a Rs 40-a-litre fuel price cut allowed CAAN to lower the surcharge, cutting the Biratnagar to Dhangadhi fare by Rs 2,580 to Rs 14,745, MeroAuto reported. In early August a rise in domestic fuel from Rs 229 to Rs 249 a litre led to a higher surcharge, calculated per seat per minute of flying, which added Rs 880 to the Kathmandu to Dhangadhi fare, Kantipur reported. The fuel shock is covered more broadly in our report on fuel prices.
Where the passengers went
The fall gathered pace through the second half of the year. Passenger volume was down 10% in mid-February to mid-March, 17% the next month, 33% in mid-April to mid-May, 34% in mid-May to mid-June and 29% in mid-June to mid-July, according to The Kathmandu Post.
Smaller regional airports, whose routes compete with buses, lost the most. Simara fell 24%, Bhairahawa 22%, Nepalgunj 16% and Surkhet 15%, the Post reported.
Buddha Air, the largest carrier, lost 394,000 passengers, a 14% decline, but kept 58.3% of the market. Yeti Airlines lost 93,048 passengers, or 9%, and held 22.5%, according to The Star, which carried the Post's report. Helicopter operators reported flight hours down by 20% to 30%.
Costs in dollars, revenue in rupees
Pratap Jung Pandey, president of the Airlines Operators Association, told The Kathmandu Post that balance sheets at several airlines had turned negative and that operators were struggling to survive. Fuel is not the only pressure. CAAN charges and spare parts are priced in dollars, while domestic fares are earned in rupees, so a weaker rupee raises costs even when fuel is stable.
The squeeze arrives as the industry also faces reform of its regulator, which is covered in a separate report on the plan to split CAAN.
The autumn trekking season is the first test of whether lower fuel prices since mid-year bring passengers back to the Lukla, Pokhara and Jomsom routes. CAAN's monthly traffic data for mid-September to mid-October, and any further change in Nepal Oil Corporation's aviation fuel price, will show whether the 12% fall was a one-year shock or a lasting loss of travellers to the roads.
How this story was made: researched and written by The Standard’s desk with AI assistance, from the published reporting and official data credited below, and checked against those sources. Our standards.
