On August 3, Prime Minister KP Sharma Oli announced on his social media page that Thai AirAsia had been granted permission to operate flights between Bhairahawa and Thailand four times a week. He also mentioned that a working group had been formed to prepare an action plan to fully operationalize the two airports in Bhairahawa and Pokhara for international flights. Nine days later, on August 13, the Oli-led government unveiled a comprehensive plan for Gautam Buddha International Airport (GBIA) and Pokhara Regional International Airport (PRIA), introducing various concessions and attractive packages for encouraging airlines to start flights to and from these airports.
Ever since these two airports were becoming ready for operation, there were concerns about the commercial viability of these two airports. The delay in commercial operation of these airports, built with a combined investment of Rs 60 billion, has put the government in a difficult situation.
According to the 61st annual report of the Office of the Auditor General (OAG), the construction of Pokhara Regional International Airport (PRIA) cost the state Rs 25.34 billion, while Gautam Buddha International Airport (GBIA) was built at the cost Rs 35.66 billion. Despite being designated as projects of national pride, both airports have failed to operate commercial international flights on a regular basis. Commercial flights at Gautam Buddha International Airport (GBIA) in Bhairahawa began on May 16, 2022, with Jazeera Airways' inaugural flight from Kuwait. Following this, Himalaya Airlines and Nepal Airlines operated intermittently. However, Nepal’s second international airport has now gone a year and a half without any international flights. A similar situation exists at Pokhara airport, which was inaugurated on January 1, 2023. Despite being the gateway to the world-famous Annapurna Region, the airport has not seen regular international flights since its inauguration.
GBIA was conceived as an alternative to Tribhuvan International Airport (TIA) in Kathmandu. The airport, located just 19 km from the UNESCO World Heritage Site of Lumbini, was anticipated to drive economic growth in the region by improving connectivity. Until April 2024, Jazeera Airways operated 110 flights to Bhairahawa Airport, while Himalaya Airlines conducted 68 round-trip charter flights to Malaysia from Bhairahawa. Since May of last year, a Nepal Airlines flight from Malaysia has made a stop in Bhairahawa every Tuesday before continuing to Kathmandu.
In contrast, Pokhara Airport has yet to host any regular international flights. Although Bangladeshi airlines have shown interest in flying to Pokhara, official discussions on the matter have not yet taken place.
Rs 60 billion investment
Spread over 198.36 hectares, the construction of the international airport in Pokhara began in the fiscal year 2015/16. Originally scheduled for completion by 2018/19 with an estimated cost of Rs 22 billion, the project was delayed by two years.
The construction concluded only in 2020/21, with the cost escalating to Rs 25.34 billion. The airport was inaugurated on January 1, 2023, by then Prime Minister Pushpa Kamal Dahal. The airport is yet to see any international flights.
Similarly, construction of GBIA was set to begin on January 15, 2015, with a planned completion by December 2017. However, the deadline was extended by four years to December 2021. Although the airport officially opened in May 2022, it remains largely inactive. The initial construction cost estimate of Rs 30.91 billion increased to Rs 35.66 billion due to lengthy construction delays.
PRIA was constructed with a Rs 22 billion soft loan from China, while the Asian Development Bank provided a Rs 7 billion loan for GBIA.
Enticing Incentives
The government's plan aims to attract international airlines to GBIA and PIA with appealing incentives. Under the government's action plan, concessions on air tickets, ground handling, and aviation fuel will be provided to international airlines until September 2026 to maximise the operational capacity of both international airports. Additionally, service fees for ground handling and VAT on air tickets will be waived off until September 2026.
As part of this plan, the Nepal Oil Corporation (NOC) has already decided to offer a discount of $100 per kiloliter on aviation turbine fuel (ATF) for international flights from Pokhara and Bhairahawa International Airports. This has brought down ATF price at both airports to $942 per kilolitre. To put this in perspective, jet fuel price in New Delhi airport is $1,169 per kilolitre.
The government has also decided to waive tourism service fees charged by the Nepal Tourism Board (NTB) from international visitors. NTB charges Rs1,130 as tourism service fee.
Budget airlines operating from Kathmandu will be required to conduct 20% of their weekly flights from either Bhairahawa or Pokhara, while larger international airlines must operate at least one weekly flight to these airports.
According to the Civil Aviation Authority of Nepal (CAAN), the government has also been urged to consider requests to grant Fifth Freedom rights to foreign airlines operating at Pokhara and Bhairahawa, allowing them to carry passengers to third destinations beyond these airports.
"We're open to discussions on proposals that promote these airports and open new routes connecting Nepal's regional airports, encouraging airlines to tap into future potential," said Hansa Raj Pandey, spokesperson for CAAN."
Additionally, to encourage private sector investment, the plan offers tax holidays and land lease exemptions to companies that establish aircraft maintenance facilities and related tourism infrastructure.
Doubts Persist
"The government's recent decision is a positive step and will benefit airlines planning to operate from Bhairahawa. However, I recommend that CAAN also provide logistical support to airlines aiming to make GBIA a hub, along with additional facilities," Bhola Thapa, president of President Travels & Tours, said.
President Travels & Tours is the General Sales Agent (GSA) of Air Arabia, Malaysia Airlines and Indigo in Nepal. Similarly, Ravi Chandra Singh, Chairperson of Society International Travel - the GSA of Jazeera Airways, termed the government move as encouraging. According to Singh, the primary concern for any new airport is business viability, and the second is ensuring the route's sustainability within the business model. “In countries where national carriers have limited capacity, it is crucial to attract foreign carriers to ensure the airport's business sustainability. The recent government announcement will increase competition among airlines and have a positive spillover effect on the entire tourism ecosystem," Singh added.
Singh cautioned the government against focusing solely on immediate business gains. "If the announced waiver helps to make the route viable for airlines, the influx of foreign tourists will undoubtedly benefit the country's economy," said Singh.
The concern, however, lies in whether this announcement will be implemented. In the past also, there were similar promises of free parking, free landing and a 50% discount on ground handling. "You could ask the representatives of Jazeera Airways if they truly received these benefits, as they operated most of their major flights from Bhairahawa," Thapa added.
Thapa also said he did not get necessary support in the past when Air Arabia was preparing to start scheduled flights to Bhairahawa. “As the GSA of Air Arabia in Nepal, we were planning to make Bhairahawa our hub to connect with Myanmar, Vietnam and other Buddhist destinations. Former Tourism Minister Sudan Kirati acknowledged our plan, but he didn’t grant the necessary approval,” Thapa said. “I visited him three times but received no response. Similarly, when I wrote to the CAAN about the requirements, they didn’t provide a proper reply and instead directed me to check their website."
GBIA, situated near Lumbini—the birthplace of Gautam Buddha—serves an important region as Southeast Asia and East Asia account for nearly 90% of the Buddhist tourist market. Despite this, tourism stakeholders, including the government and the Nepal Tourism Board (NTB) have not effectively promoted the airport to this key market.
The general sales agents (GSAs) of international airlines said the planned incentives will enable them to offer promotional fares to their passengers. "Our request for government support is aimed at benefiting our passengers. We are not requesting a permanent waiver, but rather a temporary one for all airlines, not just for us," said Singh.
Increased Enquiries
Following the government's unveiling of the operational plan for GBIA and PIA, two dozen airlines have expressed interest in operating flights. These airlines have also submitted requests to the CAAN to initiate regular international commercial flights.
Recently, Kuwait's Jazeera Airways submitted a plan to begin regular flights from GBIA from the winter season. In addition, Wizz Air Abu Dhabi has also been in communication with CAAN about launching flights from Bhairahawa. These two airlines had long sought concessions to operate from Bhairahawa, and the government’s latest plan has addressed their demands.
Additionally, representatives from Fly Dubai have inspected the GBIA for potential regular flights. The flight slot for Thai AirAsia, a low cost carrier based in Thailand, has also been finalised.
Moreover, various airlines, including Bangladesh's Air Astra, Air China, and China Eastern, have initiated correspondence with CAAN to establish regular commercial flights from Pokhara. Airlines from Bangladesh and Bhutan have set conditions for direct flights to Pokhara International Airport (PIA). Air Astra of Bangladesh and Druk Air of Bhutan, which plan to operate at PIA, have requested VAT exemptions, service charge waivers, ground handling support, and additional facilities.
Singh said that if the government implements its announcement, Jazeera Airways will resume operations from Bhairahawa by the end of September. “We also represent Wizz Air Abu Dhabi which is also interested in operating flights between Bhairahawa and Abu Dhabi,” he added.
Concerns About Air Routes
While the government announcement has given a fillip to international airlines, there are still operational issues associated with these two airports. The first and foremost is the additional air route i.e., entry points from India. For long, Nepal has been requesting India to grant air access through Janakpur, Bhairahawa, Nepalgunj, and Mahendranagar, arguing that these routes are expected to ease the movement of international flights, especially those originating from western Nepal, to the new international airports in Bhairahawa and Pokhara.
Nepal has requested India to make the L626 route, which runs over Kathmandu, Mahendranagar, and Delhi, bi-directional. In 2016, both countries agreed to this request, and in February 2017, they decided to form a joint technical team to discuss the opening of three additional air routes.
While India expressed reservations about opening the airspace over Bhairahawa and Nepalgunj due to the proximity of its defence base in Gorakhpur, it had indicated a willingness to consider opening parts of the airspace over Nepalgunj.
Nepal has long been advocating for the expansion of cross-border air routes, as there is currently only one major entry point at Simara for most aircraft flying into the country. In contrast, there are seven exit points—Bhairahawa and Mahendranagar in the west, and Simara, Biratnagar, Tumlingtar, Kakkarbhitta, and Janakpur in the east. The Simara entry point is used by the majority of flights into Nepal, leading to frequent congestion.
According to aviation experts, if international flights heading to Bhairahawa from the west are restricted from using the airspace over Bhairahawa, Nepalgunj, or Mahendranagar, they will have to take a 300-km longer route through Simara to enter Nepali airspace. Likewise, without the introduction of new cross-border air routes, flights from western Nepal to Pokhara would need to travel an extra 185 km which will result in higher costs for the carriers.
(The report was originally publihsed on the September, 2024 issue of the New Business Age Magazine.)
