There is a full scale counter-insurgency war going on, the headlines are all about bombings, landmines, blockades, bandas, abductions and extortion. Yet the tourists keep coming into Nepal. The flights are full and the trekking trails are bustling. NTB's (Nepal Tourism Board) figures for March show a whopping 60 percent increase in numbers compared to last year.

What is going on? Industry sources cite several reasons: no country in the world is safe anymore and Nepal doesn't yet have the kind of arbitrary terrorism in other countries, tourists have never been harmed in Nepal, there is no fighting in the high mountain valleys and most visitors to Nepal are adventure tourists so news of fighting doesn't necessarily deter them.

Still, the Maoist insurgency has cost the industry dearly. Arrival figures of 230,000 last year were half the peak figures for 1998, and income is even lower because hotels and trekking agents have slashed rates to stay afloat. Despite Maoist assurances that they will not harm tourists, the industry is sensitive to information of strikes or violence. Pokhara was badly hit by the two-week Chitwan and Gandaki blockade in March and the battle for Beni.

There are also worrying signs that assurances guaranteeing safety of trekkers is not always being followed by grassroots militia. Recent incidents:

3 April: Protesters in Kathmandu pelted stones at vehicles carrying tourists arriving after an overland drive from Tibet. Many of these vehicles were driven into the safety of the BICC. "Some tourists were sick with fear," recalls Rabi Poudel, president of Nepal Association of Travel Agents (NATA).

24 March: Maoist rebels forced two French tourists to walk back to Daman on the Tribhuban Rajpath because of the Makwanpur and Dhading blockades. Their van was pushed over a cliff.

21 March: The rebels destroyed the tower in Meghauli, an airfield used exclusively for tourists travelling to the upmarket Tiger Tops resort in the Royal Chitwan National Park.

15 March: Suspected Maoists have been setting off explosions in government buildings in the vicinity of Thamel including the Election Commission and the Sanchaya Kosh Building. Not one has been hurt, but there are loud bangs.

11 March: Maoists vandalised a bus carrying two British tourists to Tiger Tops from Bharatpur Airport. The two were badly shaken and hired a rickshaw back to Narayanghat.

25 February: A socket bomb hit a van carrying a French family driving overland to Kathmandu from India during a banda in Kanchanpur. The tourists were so spooked they cut short their Nepal visit and returned to India through Dhangadi.

Recent news of attacks on Indian vehicles and businesses is worrying the travel industry who fear a slump in Indian arrivals. "Indian tourists were already keeping away because they heard about the blockades," says Sundar Shrestha, former president of Pokhara's HAN chapter. "There were 60 percent cancellations in the last one week alone."

The average length of stay of tourists in Nepal has also dropped from 14 days to eight. Tour operators say they were convincing their international agents and clients that the Maoist rebels have assured that no harm would befall tourists. But the Maoists have not always kept their word and there are reports of trekkers being forced to pay Maoist tax on the trails. "It looks like the commitment of the Maoist leadership has not reached their cadre," says NATA's Poudel.

Deepak Mahat, President of the Trekking Agents Association of Nepal says: "They must either stop deceiving us or declare the closure of tourism in Nepal." With tension increasing in the central and western region, tourists have headed east to the Everest area, which has reported record numbers.

Several international travel agents have visited the country to take stock of the situation and found no direct evidence of tourists being attacked by rebels, but they told local operators that burnt vehicles along the highway and blockades create psychological terror. Embassy advisories against travelling to Nepal also have a negative impact.

NTB is doing its bit operating airport shuttle buses during the banda this week. Said Tek Bahadur Dangi of NTB. "We are doing what we can, but we can't stop the political forces from organising strikes."