For decades, the hospitality sector in Pokhara, Nepal’s lakeside tourism capital, operated within the constraints of limited room capacity and reliance on domestic or overland travel. However, the vision of a transformative infrastructure project radically altered this trajectory, spurring a private investment boom predicated on the promise of global connectivity.

Driven by official assurances that a new international airport would unlock a surge in high-value foreign arrivals, local investors aggressively expanded the city’s accommodation infrastructure. This resulted in a current inventory of over 1,000 hotels and approximately 40,000 tourist-standard rooms, with the Hotel Association Pokhara Nepal representing hundreds of establishments built or upgraded in anticipation of this new era.

This expansion was inextricably linked to the development of the Pokhara Regional International Airport. The project was formalized in 2013 through an engineering-procurement-construction agreement with China CAMC Engineering and funded by a $216 million loan from China’s Export-Import Bank—a venture later folded into the Belt and Road Initiative, symbolizing a high-stakes commitment to modernizing Nepal’s aviation access.

The airport’s execution, however, was marked by a widening divergence between its ambitious design and the complex realities of governance and geopolitics. While proponents across successive administrations championed the facility as an economic engine capable of servicing its own debt through projected passenger traffic of nearly 300,000 annually, oversight bodies and independent audits began to document systemic irregularities.

Investigations by parliamentary committees and the Commission for the Investigation of Abuse of Authority pointed to significant cost escalations. These inquiries revealed that the price tag inflated from initial government estimates of $170 million to over $244 million, citing artificially padded advisory fees and compromised procurement processes involving dozens of public officials and contractors.

Simultaneously, technical and diplomatic constraints eroded the project’s viability. India’s refusal to grant optimal airspace entry routes forced aircraft into less efficient flight paths. Furthermore, the airport’s physical limitations—specifically regarding runway length and payload capacity—rendered it unsuitable for the wide-body jets necessary to connect Pokhara directly with distant international hubs.

Since its inauguration in January 2023, the facility has struggled to bridge the gap between its costly infrastructure and the market demand required to sustain it. This has resulted in a stark economic mismatch that has left the tourism sector exposed. Despite the fanfare of its opening, regular international flight operations have failed to materialize.

Currently, the airport relies on sporadic charters and minimal scheduled service that falls drastically short of the volume needed to fill the 40,000 rooms standing ready in the valley. Financial reports indicate that the airport generates negligible revenue against annual debt servicing obligations nearing 840 million rupees, a disparity that has triggered urgent, though so far unresolved, diplomatic requests for loan restructuring.

The crisis of confidence deepened in late 2025 when anti-corruption inquiries culminated in charges against numerous officials. These charges validated long-standing public suspicions about the project's management and further soured local sentiment toward what was once heralded as a gateway to prosperity.

Ultimately, this operational paralysis has left Pokhara’s tourism entrepreneurs servicing debt on empty capacity. The situation stands as a stark illustration of the severe long-term risks of decoupling infrastructure planning from transparent governance and realistic market assessment.