Buddha Air - Company Analysis and Outlook Report (2026)

Buddha Air’s journey into 2026 started with a sobering reminder of the challenges facing Nepal’s aviation sector.

On January 2, an ATR 72-500 aircraft overshot the runway at Bhadrapur Airport, with all 55 passengers and crew safely evacuated. While the incident underscored infrastructure vulnerabilities at regional airports, it also highlighted the carrier’s robust safety protocols that prevented casualties.

This runway excursion comes at a pivotal moment for Buddha Air, which has spent 28 years establishing itself as Nepal’s dominant domestic carrier with a commanding 60 percent market share and record-breaking financial performance through 2025.

Table of Contents

• Market Dominance Through Fleet Expansion

• Financial Performance Reaching New Heights

• Technical Infrastructure and Safety Investment

• Operational Challenges and Industry Headwinds

• Aircraft Fleet Maturity and Replacement Planning

• Environmental Stewardship

• My Final Thoughts

Market Dominance Through Fleet Expansion

Buddha Air operates 18 ATR aircraft comprising two ATR 42-320s and sixteen ATR 72-500s. This makes it the seventh-largest ATR fleet globally.

The carrier connects 13 domestic cities across 43 flight routes, plus two international destinations in India (Varanasi and Kolkata). Between October 1997 and September 2025, Buddha Air completed 721,570 flights, transporting 27.97 million passengers.

Financial Performance Reaching New Heights

Buddha Air achieved its highest-ever revenue of NPR 13.22 billion in fiscal year 2024, representing 9 percent year-over-year growth. The first half of FY 2024/25 saw revenues reach NPR 7.41 billion, maintaining the carrier’s dominant position in Nepal’s domestic aviation market.

Operating profit margins improved dramatically from 10 percent in FY2023 to 18 percent in FY2024. This surge resulted from reduced fuel prices and a regulatory change allowing VAT registration from the start of FY2024, enabling input tax credit claims on capital expenditures and operating expenses including fuel costs.

Revenue Growth Trajectory:
FY2021: NPR 3.34 billion
FY2022: NPR 10.10 billion
FY2023: NPR 12.17 billion
FY2024: NPR 13.23 billion
H1 FY2025: NPR 7.41 billion

The carrier’s financial strength earned it an upgraded credit rating in June 2025. ICRA Nepal elevated Buddha Air’s long-term rating to [ICRANP] LA from LA-, and short-term rating to A1 from A2+, placing it among the top 1 percent globally in aviation credit ratings.

Technical Infrastructure and Safety Investment

Buddha Air operates Nepal’s only international-standard closed-door hangar facility at Tribhuvan International Airport. Built in 2012, the 37,000-square-foot hangar represents a $2.5 million investment and holds Part 145 Approved Maintenance Organisation certification from Nepal’s Civil Aviation Authority.

The facility stores spare parts and materials valued at approximately $22 million, with an additional $28 million in specialized tools for ATR 42-320 and ATR 72-500 aircraft. The hangar provides maintenance services not only for Buddha Air’s fleet but also for regional carriers, including NOVO Air from Bangladesh and Druk Air from Bhutan.

Buddha Air invests approximately $600,000 annually in pilot training programs, utilizing dedicated six-axis simulators. The carrier employs 18 instructor pilots and operates Nepal’s only ATR Flight Panel Trainer, allowing pilots and engineers to practice handling challenging situations in a simulated environment.

The airline implements a voluntary Flight Data Monitoring system that analyzes every flight within 24 hours, identifying trends and deviations to enable prompt corrective actions.

Operational Challenges and Industry Headwinds

Despite its dominant position, Buddha Air faces intensifying competition. Yeti Airlines and Shree Airlines have both expanded their fleets aggressively, leading to industry-wide passenger load factors declining to 84-85 percent in recent years from over 90 percent previously.

The competitive pressure forced major carriers to implement floor pricing mechanisms to prevent destructive price wars. Buddha Air’s revenue per available seat kilometer recovered to pre-pandemic levels of NPR 21.5, but rising personnel costs compressed the RASK-CASK spread to NPR 6.5, down from NPR 8.9 in FY2019.

Foreign exchange exposure represents another significant risk. Approximately 65 percent of Buddha Air’s bank borrowings are denominated in US dollars, as are bulk maintenance and parts expenses. While USD-based revenues from foreign tourists improved to 15 percent in H1 FY2025 from 12 percent in FY2023, this remains below the pre-pandemic level of 25 percent.

The gradual weakening of the Nepali rupee against the US dollar has generated forex losses, though growing tourist arrivals provide partial relief. Nepal welcomed 1.16 million international visitors in 2025, representing modest 1 percent growth and reaching 96.8 percent of pre-pandemic 2019 levels.

Aircraft Fleet Maturity and Replacement Planning

Several aircraft in Buddha Air’s fleet are approaching economic maturity, creating pressure for timely replacements. The carrier demonstrated its commitment to fleet renewal in September 2024 when it retired aircraft 9N-AIN after 16 years of service, marking the first ATR aircraft globally to reach its full economic life of 70,000 flight cycles.

The airline previously phased out its Beechcraft 1900D aircraft in February 2023, selling both 18-passenger planes to a Canadian aviation company. This transition aligned with Buddha Air’s strategy to operate a unified ATR fleet offering greater capacity and fuel efficiency.

The challenge ahead involves replacing aging aircraft without significantly increasing debt burdens, particularly given the carrier’s improving gearing ratio of 1.4 times as of January 2025, down from 1.9 times in October 2023.

Environmental Stewardship

Buddha Air’s ATR fleet demonstrates strong environmental performance. In FY 2024/25, the carrier reduced CO2 emissions to 0.1986 kg per passenger per mile.

The ATR 72-500 fleet consumed 135.5 million liters of fuel across 140,111 flight hours, equating to 14 liters per hour per passenger. The smaller ATR 42-320 aircraft consumed 51.9 million liters over 65,721 hours, or 18 liters per hour per passenger.

Through advanced flight data monitoring and optimized air traffic management procedures, Buddha Air has cut carbon emissions by 8-18 percent, demonstrating that operational efficiency and environmental responsibility can advance simultaneously.

My Final Thoughts

Buddha Air enters 2026 from a position of financial and operational strength, having achieved record revenues and an upgraded credit rating while maintaining 60 percent market share. The Bhadrapur incident, while concerning, demonstrated effective safety protocols that prevented casualties.

The path ahead requires navigating fleet modernization without compromising financial stability, managing forex exposure as the rupee fluctuates, and maintaining market position amid aggressive competition.

The carrier’s substantial investments in maintenance infrastructure, pilot training, and safety systems provide a solid foundation, but aging aircraft and infrastructure limitations at regional airports pose tangible risks.

Buddha Air’s 28-year track record suggests management can balance these competing demands. The carrier has proven remarkably resilient through political instability, the 2015 earthquake, and the pandemic.

Success in 2026 and beyond depends on executing timely fleet renewals, capitalizing on Nepal’s tourism recovery, and maintaining the operational discipline that earned its industry-leading credit rating.