The airline started operations in October 1997 with a new Beech 1900D. The name of the airline is derived from the Sanskrit word 'Buddha' meaning enlightened preferably a title used for the much revered Siddharta Gautama. The average age of the aircraft are 4 years.
On 25 September 2011, Buddha Air Flight 103 crashed during a tourist flight of the Mount Everest region. The flight, operating with a Beech 1900 D and 19 passengers — mostly foreign tourists — crashed in Nepal according to reports. The aircraft apparently lost contact with the control tower near Kathmandu's airport. 16 tourists (10 Indians, two Americans, a Japanese citizen and three Nepalis) and three crew members were on the flight.
The airline also offers chartered flights and daily mountain flights. Buddha Air became the first foreign airline to start flights to Paro, Bhutan, in summer 2010 which was the airline's first international destination.