The Civil Aviation Authority of Nepal has proposed a bloated annual budget of Rs41.50 billion, betting on a rebound in the travel market and increased revenues as the vaccination drive picks up pace.

But almost two months into the fiscal year, the financial plan is yet to be passed because its board lacks a chairman. The regulator is hoping that the recently installed administration will soon name a new tourism and civil aviation minister-cum-chairman to endorse the budget for this fiscal year 2021-22 which began mid-July.

This year's budget is slightly higher than last year's which amounted to Rs41.11 billion.

The government last week said it had administered more than 10 million doses of vaccines against Covid-19. As of Monday, 5.57 million Nepalis (nearly 19 percent of the national population) had taken the first jab, and 4.96 million people (almost 17 percent) had been fully vaccinated.

“The draft of the budget is currently on hold,” Raj Kumar Chhetri, spokesperson for the Civil Aviation Authority of Nepal, told the Post. “It has been slightly delayed, but that will not make any significant difference.”

Jagannath Niraula, finance director at the civil aviation regulator, said that the annual budget was slightly higher because the authority is planning to complete the two under-construction international airports in Pokhara and Bhairahawa this fiscal year.

While the facility in Bhairahawa has reached the testing phase, the Pokhara airport project has been given one more year to complete the construction. It is expected to be ready by July 10, 2022 before the current fiscal year ends.

The airline industry has not been able to take off because of calls for social distancing, restrictions on tourist arrivals, closure of hotels and resorts, cancellation of major events and other measures intended to prevent the spread of the coronavirus.

Revenue and passenger numbers have seen dramatic declines.

In the previous fiscal year 2018-19, the Civil Aviation Authority of Nepal earned revenues totalling Rs9 billion. In the last fiscal year 2019-20, income plunged 43 percent to Rs4.50 billion.

The airport had anticipated revenues to climb to Rs10.50 billion in 2019-20 following the launch of the Visit Nepal 2020 promotional campaign and resultant higher passenger traffic.

But Covid-19 came and disaster followed.

In 2020-21, the coronavirus situation went from bad to worse. Consequently, the authority made a downward revision of its projected revenue to a rock bottom Rs2.67 billion. But it succeeded in collecting Rs2.95 billion.

The authority reported that Nepal’s civil aviation industry suffered losses amounting to Rs37 billion, from the time the first lockdown was enforced on March 24, 2020 to June 1, 2021.

Out of total estimated losses, domestic airlines suffered losses amounting to Rs25 billion followed by the Civil Aviation Authority of Nepal with Rs12 billion.

“It’s a big loss that Nepal’s civil aviation industry has incurred in history,” said Chhetri.

According to the report, Nepal Airlines incurred a loss of Rs7 billion while private international carrier Himalaya Airlines lost Rs3 billion.

International passenger traffic at Kathmandu’s Tribhuvan International Airport in 2020 fell to its lowest level since 2003, illustrating Covid-19's devastating impact on air travel.

According to airport statistics, 1.10 million international travellers passed through Tribhuvan International, a 73.29 percent plunge from the previous year. This translates into a loss of 3.03 million passengers in one year.

On March 12, 2020, one day after the World Health Organisation declared the Covid-19 outbreak a pandemic and urged countries to take precautionary measures, the Nepal government decided to temporarily stop issuing on-arrival tourist visas to nationals of all countries.

It also barred all spring mountaineering expeditions, including attempts on Everest. On March 24, 2020, Nepal imposed a complete lockdown.

Before the coronavirus, domestic aviation was on a high as Nepalis, lured by cheap tickets, took to the skies like never before and filled planes to capacity.

All that changed after the pandemic grounded flyers and airlines. In less than a year, the virus wiped out more than half of the domestic passenger traffic.

Tribhuvan International Airport statistics show that domestic carriers lost 1.73 million passengers. According to the data, domestic airlines carried 1.45 million passengers in 2020, a 54.28 percent plunge from the 2019 figure.

Domestic passenger traffic at Kathmandu’s Tribhuvan International Airport in 2020 fell to an 11-year low. But airline officials said that domestic carriers had recovered to pre-Covid passenger numbers since July 2021.

According to Chhetri, the construction of new terminals in Biratnagar and Nepalgunj airports, and the resumption of Mahendranagar Airport, the main tourist gateway to Shuklaphanta National Park, are the key projects for this fiscal year.

“Many plans have been put on hold due to Covid-19 as funding sources have dried up,” said Chhetri.

The largest portion of the authority’s income comes from passengers, and landing and parking charges for aeroplanes.

The aviation body was able to spend only 42 percent of the budget last fiscal year as most of its projects were affected by the lockdown. Capital expenditure reached only 38 percent.

Airport development tax, passenger service charge, and parking and navigation charges account for the major earnings of the airport.