A new formulation, based on the semi-analytical finite element method, is proposed for elastic shells conveying fluids. The structural equations are based on the shell element proposed by Ramasamy and Ganesan [Comput Struct 70 (1998) 363] while the fluid model is based on velocity potential. Dynamic pressure acting on the walls is derived from Bernoulli's equation. Imposing the requirement that the normal components of velocity of the solid and fluid be equal, introduces fluid-structure coupling. The proposed technique has been validated using results available in the literature. This study shows that instability occurs at a critical fluid velocity corresponding to the shell circumferential mode with the lowest natural frequency and this phenomenon is also independent of the type of structural boundary conditions imposed. © 2002 Elsevier Science Ltd. All rights reserved.