The Tara Airlines plane, which was on a 15-minute scheduled flight to the mountain town of Jomsom, took off from the resort town of Pokhara, 200 kilometers (125 miles) east of Kathmandu. It lost contact with the airport tower shortly after takeoff.
Police official Ramesh Thapa said there was no information on the turboprop Twin Otter aircraft and a search was underway.
There were six foreigners on board the plane, including four Indians and two Germans, a police official, who was not authorized to speak to the media, said on condition of anonymity.
It has been raining in the area for the past few days but flights have been operating normally. Planes on that route fly between mountains before landing in a valley.
It is a popular route with foreign hikers who trek on the mountain trails and also with Indian and Nepalese pilgrims who visit the revered Muktinath temple.
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According to plane tracking data from flightradar24.com, the 43-year-old aircraft took off from Pokhara at 04:10 GMT and transmitted its last signal at 04:22 GMT at an altitude of 12,825 feet (3,900 meters).
In 2016, a Tara Airlines Twin Otter flying the same route crashed after takeoff, killing all 23 people aboard. In 2012, an Agni Air plane also flying from Pokhara to Jomsom crashed, killing 15 people. Six people survived. In 2014, a Nepal Airlines plane flying from Pokhara to Jumla crashed, killing all 18 on board.
In 2018, a US-Bangla passenger plane from Bangladesh crashed on landing in Kathmandu, killing 49 of the 71 people aboard.
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