How big will the impact be as Nepal’s major international airport closes for ten hours starting Friday?

Economists say it’s too early to quantify, but the losses for the Nepali economy will be huge.

Nepal’s economic momentum has slowed down since the late September floods, and the government’s decision to close the key airport could stifle growth.

“It will be a big setback for the country’s ailing economy as it will hit tourism and business activities, including transport, hotels, restaurants, telecommunication and other sectors,” said Bishwambhar Pyakurel, a noted economist.

Pyakurel called it a deliberate “restriction” imposed by the government, despite it having many alternatives to carry out construction at the airport.

Tickets prices are soaring, with most destinations, including Nepal’s labour markets, witnessing a fourfold price rise due to a widening gap between supply and demand.

A notice to airmen, popularly known as NOTAM, issued by the Civil Aviation Authority of Nepal, states that the airport will be closed from 10pm to 8am from Friday for five months, until March 31, to expand the taxiways.

The airport is currently closed from 2am to 6am.

Two parallel taxiway projects are ongoing at the Tribhuvan International Airport in Kathmandu. The extension of the parallel taxiway was initially planned in 2009.

Travel trade entrepreneurs said the civil aviation body’s mismanagement could shave off at least Rs50 billion in airline and tourism industry revenues, even as the government struggles with revenue generation.

The outlooks for 2024-2025 of the World Bank, the Asian Development Bank, and the International Monetary Fund forecast economic recovery on the basis of improved tourist arrivals in Nepal.

Growth in food, transport, and accommodation sectors have been better than expected even as other economic indicators lag.

In September, the Asian Development Bank revised Nepal’s economic growth forecast upward to 4.9 percent for the current fiscal year beginning mid-July, based on projected agricultural and electricity output growth and buoyant tourist arrivals.

The National Statistics Office’s annual account estimated that accommodation and food service activities, which are linked to tourism, would see a robust growth of 21.84 percent, the highest among 18 economic compositions in the Nepali economy, in the last fiscal year ended mid-July.

According to the respective ministries, the late monsoon floods and landslides affected agriculture and electricity output, and now tourism has received a big jolt.

It will be more painful for domestic airlines as winter will bring more fog and pollution, curtailing flight frequencies.

“It’s an unplanned construction,” said Pyakurel. “Today, time is money. For trading, business and leisure, coming to Nepal will be a big challenge,” he said, adding that the airfares are so high that tourists and businessmen will think twice before flying. Hoteliers say that due to high ticket prices, key events planned in Kathmandu have either been postponed or cancelled.

As part of the improvement plan, a 1,140-metre-long parallel taxiway is being built on the runway’s southern side, or the Koteshwar end. This will connect the existing international apron to the end of runway 02.

Similarly, another 450-metre-long parallel taxiway is being built at the northern end of the runway.

Considering the planned infrastructure, the maximum runway capacity will see 42 aircraft movements per hour in mixed-mode operation, enabling 187,000 aircraft movements per year from the 128,449 flight movements last year.

In 2023, the Kathmandu airport recorded 8.7 million passengers—4.54 million international air travellers and 4.15 million domestic ones, according to statistics of the Tribhuvan International Airport.

Similarly, in terms of flight movement, the airport handled 128,449 flight movements—31,460 flights by international airlines and 96,989 by domestic carriers.

Travel trade entrepreneurs say the ill-planned construction would take way too long, extending until another peak tourism season in spring (March).

“These will be painful months for travel trade entrepreneurs as the plan is being implemented in the peak tourism season. We, however, cannot oppose the airport’s infrastructure development,” said Sagar Pandey, president of the Trekking Agencies Association of Nepal.

“On different occasions, we have suggested that the government and the civil aviation body find alternatives to such a long closure, such as incentivising airlines to fly from Bhairahawa and Pokhara international airports.”

However, international airlines are hesitant to connect to the new airports, which have remained idle for months due to the technical and financial issues of flying to them.

Pandey said they might lose at least 40 percent of trekkers this year considering the flight cancellations.

Nepal Tourism Board has revised its 2024 tourist arrival forecast to 1.1 million from the projected 1.3 million. As of October, Nepal has received 900,000 tourists.

Some entrepreneurs say that five hours of construction time, as it used to be, was appropriate, but insiders suspect that a 10-hour closure would force many airlines to divert to Bhairahawa.

For instance, on October 27, the Civil Aviation Authority of Nepal (CAAN) took action against a Thai AirAsia flight, refusing to allow it to land at Kathmandu airport.

Media reports show that the flight was later permitted. However, after the plane landed, authorities temporarily suspended the airline and its general sales agent. Later the restrictions were lifted on the “condition” that the airline would fly from Bhairahawa as well. Airline officials say the “punitive measure” was not the aviation regulator’s first action.

On October 30, 2022, the CAAN cancelled Nepal Airlines’ scheduled flight to Delhi as punishment for defying instructions to move some of its international services to the newly-built Bhairahawa airport.

Nepal Airlines’ jet remained on the ground, and more than 500 passengers were affected by the last-minute cancellation.

“I would like to seriously draw the attention of the government that Tribhuvan International Airport is being closed for 10 hours daily from November 8 to March 31. It cannot be considered normal to close an international airport for 10 hours to build structures. Earlier, during the rehabilitation of the main runway, the airport was closed only for 5/7 hours at night,” lawmaker Udaya Shumsher Rana wrote on X on October 29.

“It is clear that closing the Kathmandu airport means diverting flights to Pokhara and Bhairahawa to show that those two airports are fine. There are technical reasons behind international airlines not being ready to fly to these two airports. Undoubtedly, the Civil Aviation Authority leadership is trying to hide its weaknesses by closing the Kathmandu airport for 10 hours.”

Rana argued that if this decision is not revised, Nepal’s global image and tourism business would suffer.

The airport closure will also hit domestic flights. Buddha Air, Nepal’s largest domestic carrier, currently operates 180 daily flights. As the airline must reduce its flights to 135, there will be a substantial drop in its revenue and government’s taxes.

Some other domestic airlines have complained to the regulator that flight allocation is not proportionate under the new arrangement.