Nepal Airlines’ Market share declines amid increasing foreign airline presence

KATHMANDU: Nepal Airlines Corporation’s (Nepal Airlines) market share has been steadily declining, while the presence of foreign airlines has been increasing. According to data provided by the Civil Aviation Authority of Nepal’s Tribhuvan International Airport office, Nepal Airlines’ market share dropped to 12.11% from January to July 2024.

The steady decline is particularly concerning given the competitive environment in global aviation and its impact on Nepal’s tourism and travel industry. By the end of 2023, Nepal Airlines’ market share had already fallen to 14.20%, and the trend has continued into 2024.

The grounding of one of its narrow-body aircraft further contributed to the decline in its market share. The corporation’s market share has been continuously decreasing since the arrival of the team led by Executive Chairman Yuvraj Adhikari.

In 2020, Nepal Airlines had achieved a market share of 25%, but by 2023, it had dropped by 10.79 percentage points. This significant reduction highlights the challenges the national carrier faces amid stiff competition from international airlines. By the end of 2023, Nepal Airlines’ share of total international air passengers had decreased to 14.20%. Not only has the market share decreased, but the monthly revenue has also declined by 40 to 50 crores.

According to the airport office data, a total of 2,490,612 passengers traveled internationally in the first six months of 2024. Of these, 301,799 passengers traveled on Nepal Airlines. This decline in passenger numbers has had a direct impact on the airline’s revenue and overall financial health.

The management issues contributing to this decline include negligence and operational inefficiencies. Due to management negligence, the number of grounded aircraft has been increasing, which has affected both market share and revenue. The inability to keep aircraft operational has led to reduced capacity and frequency of flights, thereby impacting customer satisfaction and market competitiveness.

In contrast, foreign airlines have been increasing their presence and market share in Nepal. The most notable among them is Qatar Airways, which has maintained its position as the airline with the highest number of passengers. Qatar Airways provided international air service to 305,316 passengers in the first six months of 2024, showcasing its strong foothold in the Nepali market.

The rise of foreign airlines is not just limited to Qatar Airways. Other international carriers like Turkish Airlines, Emirates, and Singapore Airlines have also been expanding their operations and capturing significant market share. These airlines offer competitive pricing, superior service, and frequent flight schedules, which attract a large number of passengers.

The increasing presence of foreign airlines is a double-edged sword for Nepal. While it enhances connectivity and offers more options for travelers, it also puts pressure on Nepal Airlines to improve its services and operational efficiency. The tourism sector in Nepal, which relies heavily on air travel, could benefit from increased competition if it leads to better services and more flight options.

However, for Nepal Airlines, the challenge is to turn around its performance and regain lost market share. This requires strategic initiatives focused on improving operational efficiency, customer service, and expanding route networks. Additionally, there needs to be a concerted effort to resolve internal management issues and ensure that aircraft are kept operational.