Kathmandu. At a time when there is talk of adding turboprop and ATR aircraft to some new and old airlines in Nepal, the overall market situation shows that the domestic aviation industry is at the crossroads of expansion and risk.
Currently, Buddha Air is at the forefront with around 60 percent market share while Yeti Airlines and Shree Airlines are estimated to have a market share of around 17 and 16 percent respectively. With these three companies controlling more than 90 percent of the market, it is not easy for new players to enter.
On the one hand, the number of domestic passengers, increased demand at regional airports, and the relatively affordable operating costs of turboprop aircraft have shown the potential for new investment, while on the other hand, a weak economy, declining purchasing power, political uncertainty and intense competition have also increased the risk.
The past air accidents have had a serious impact on the reputation of the Nepali airline industry. The business has been negatively impacted especially after the ATR crash of Yeti Airlines in Pokhara, the loss of passenger confidence, the decrease in bookings for some time and the portrayal of Nepal as a ‘high-risk flight destination’ in the international arena.
The European Union’s ban on Nepali aircraft is also affecting long-term confidence and expansion plans.
Meanwhile, the “Gen G” movement in recent months and the volatile environment that followed have led to a decline in tourist arrivals, which has also had a direct impact on airlines.
International tourist arrivals are yet to reach pre-Covid levels, although domestic air passenger numbers are gradually improving. In such a situation, the entry of a new airline seems possible, but the risk to the new player is high if security, financial stability, regulatory approvals and strong competition for market share are not managed.
While Nepal’s aviation industry has the potential to expand, it is linked to caution, strong investment, and reliable security arrangements.
