Nepal’s aviation journey, which began in 1949 with its first flight landing in Kathmandu, has evolved over seven decades into a network of international and domestic airports. Following the inauguration of Tribhuvan International Airport (TIA) in 1955, the country joined the International Civil Aviation Organization (ICAO) in 1960 and upgraded TIA with a concrete runway by 1964. The Civil Aviation Authority of Nepal (CAAN) was later established in 1998 as an autonomous regulator under the Ministry of Culture, Tourism and Civil Aviation to manage the growing sector.

In response to increasing domestic and international travel, and to relieve congestion at TIA, Nepal has constructed two additional international airports—Gautam Buddha International Airport (GBIA) in Lumbini and Pokhara Regional International Airport (PRIA)—while also developing 52 domestic airports. However, despite this infrastructure expansion, the sector continues to face several critical challenges ranging from poor economic planning to unresolved regulatory issues and geopolitical constraints.

Infrastructure without viability

According to a report by Nepal Economic Forum, despite the physical expansion, economic feasibility remains a concern. Over one-third of Nepali airports are currently non-operational, a result of infrastructure planning that has not kept pace with changing demographics and transportation trends. Several airports were built in remote regions where road access was once limited, but as connectivity improved, road travel has become more convenient and cost-effective than air travel. Consequently, flight frequency has declined, rendering many airports unviable.

Experts argue that a lack of proper feasibility studies has contributed to this situation. Airports continue to be built without sufficient regard for population density, proximity to other airports, or long-term return on investment. According to CAAN, only 18 airports currently operate at a profit.

Two recent projects illustrate this concern. GBIA, constructed at a cost of $76mn, generated revenue of NPR211.39mn in 2023. At this rate, it would take more than 50 years to recover the construction costs—25 years even if traffic were to double. PRIA faces a similar outlook, having earned just NPR349.36mn in 2023, despite a total investment of NPR25bn. With limited international operations and high-interest Chinese loans funding its development, PRIA risks reinforcing concerns about debt sustainability.

Terrain and topography pose hurdles

Nepal Economic Forum believes that Nepal’s mountainous landscape continues to be a major obstacle in both airport construction and aircraft operation. Over two-thirds of its airports are Short Take-Off and Landing (STOL) airports, limited to small aircraft with low passenger capacity, making profitability difficult for both airlines and airports.

Even international airports are not immune to these challenges. PRIA and TIA are surrounded by hilly terrain, increasing operational risks. In the southern plains, GBIA suffers from low visibility in winter, disrupting schedules and reducing reliability.

Moreover, the country’s northern border with China offers limited airspace options due to rugged terrain, forcing Nepal to rely heavily on Indian air routes. The dependence on India for air traffic corridors adds another layer of geopolitical vulnerability to the aviation sector.

Aviation diplomacy and geopolitical friction

Both GBIA and PRIA were built by Chinese companies, with PRIA funded through loans under the Belt and Road Initiative (BRI), according to Chinese diplomatic statements. Despite repeated requests from Nepal, India has not yet granted overflight permissions or direct air routes for these airports. The lack of shorter and more economical air corridors has discouraged international carriers from using the newer airports, limiting their utility and raising operating costs.

This issue underscores the need for more effective aviation diplomacy to balance relations with both neighbours and ensure that major infrastructure investments do not remain underutilised.

Governance bottlenecks and regulatory shortcomings

Governance issues continue to hamper Nepal’s aviation performance. CAAN’s dual role as both operator and regulator presents an inherent conflict of interest. The body has been criticised for failing to meet international safety standards, contributing to Nepal’s continued presence on the European Union's aviation blacklist since 2013. Additionally, there have been allegations of corruption and political interference in airport project approvals and operations.

Although Nepal’s Aviation Policy 2006 outlines clear criteria for airport development—based on geographic, economic, and demographic considerations—many airport projects have been pushed through as political commitments, often violating established distance requirements between airports. For instance, in the Terai region, the minimum allowed distance between two airports is 40 nautical miles (74.08 km), a regulation that has reportedly been ignored in several cases.

Two long-pending pieces of legislation—the Civil Aviation Authority of Nepal Bill and the Air Service Authority of Nepal Bill—aim to separate regulatory and operational responsibilities. However, they have remained stuck in the legislative process for over 15 years.

Looking ahead

Despite these setbacks, there are opportunities for reform. Drawing from international examples, Nepal could consider privatising airport management or forming public-private partnerships. Countries like India and Rwanda have made significant improvements in efficiency and service quality through such models, the Nepal Economic Forum report stated.

Separating regulatory and operational functions, aligning CAAN with ICAO standards, and enhancing safety oversight could help restore confidence among international airlines and regulators. Emphasis on better training, performance-based management, and stricter compliance with safety norms would be critical steps toward lifting the EU ban and improving Nepal’s global aviation standing.

Ultimately, while Nepal has made commendable progress in aviation infrastructure development, the sector’s future depends on resolving long-standing governance, policy, and diplomatic challenges.