The Bhutanese Leading the way.
Due to expensive airfares, Druk Air and Bhutan Airlines are losing their potential clients as tourists are using Bagdora Airport to come to Bhutan. The majority are Indian tourists but there are also tourists from other countries doing the same.
Tour operators agree that Bhutan is losing out on large numbers of tourists as there are many complaints of expensive airfare.
According to Bimal, a tour operator, high airfare impacts tourism. “There are many tourists who want to come to Bhutan, however tourists find our airfares expensive. Only about 20-30% of our clients are able to afford the flight tickets.”
Deki, another tour operator who has been in business for more than 10 years also shared the same sentiments. “Currently, our biggest clients are Indian tourists and for them, the air fares are exponentially high. Over the years, the airfares have increased exponentially, for all foreign tourists which is impacting tourism in the country.”
With high airfares many tourists are not coming to Bhutan but for those who want to come tour operators are bringing in tourists from the Bagdora airport in Siliguri and they then travel till Phuentsholing via land.
The two airlines, Druk Air and Bhutan Airlines have been impacted a lot due to the pandemic since the March of 2020. Druk Air has incurred a loss of approximately Nu.2.5 billion and Bhutan Airlines have incurred a loss of Nu.1.2 billion since March 2020.
The Bhutanese in August of 2022 talked with respective officials from the airlines, with both sharing that bookings were a major challenge then and they are hoping for increased tourists gradually.
However, this gradual increase is not happening with tourists opting to fly via Bagdora.
Both airlines also have two different airfare rates, for locals and tourists. For a tourist to fly in from Bangkok, it will cost him/her around USD 494.77 which is around Nu. 40,540 in Bhutanese currency if he flies with Druk Air and for a local, for the same flight will cost Nu. 20,644.
If the tourist was to fly from Bangkok to Paro with Bhutan Airlines, it will cost him/her $500.33 which is around Nu. 40,995.6 and for a local it will cost around Nu. 20,430. Currently, Bhutan Airlines does not fly to Delhi and Kathmandu.
After the new SDF, the higher number of tourists that are visiting Bhutan has been Indians. If an Indian tourist was to fly from Delhi to Bhutan, he/she will have to pay around Nu. 26,740 for a one-way flight.
However, if he flies from Delhi to Bagdora (like many other tourists do), the airfare ranges from around INR 4200-12000, and then taking a bus or taxi till Phuentsholing is a much cheaper option than a direct flight till Paro.
The bonus is the SDF waiver at border towns for 24 hours, they get a much cheaper package which is a substantially different package from the costlier route through Paro due to the airfare.
Even third country tourists who pay USD 200 SDF are found to be using the Bagdora route to avoid the high airfares.
As tourists keep on coming from the Bagdora route, the two airlines will keep on losing potential clients and income generation.
This will not only impact the airlines but also other businesses which are cater to tourism like taxi operators who used to enjoy higher income generation during the tourist season.
Bhutan only has two airlines, and Bhutan Airlines was constituted to avoid market monopoly and for a healthy competition. However, for two competing airlines, the airfares are substantially similar, showing lack of genuine competition which means an effective duopoly is in place.
Apart from Indian tourists there are also several accounts of Bhutanese using the Bagdora airport as the various Indian airlines offer much better rates to fly to destinations in India and abroad.
The Director of Bhutan Civil Aviation Authority (BCAA), Kinley shared that the airlines’ airfare is computed based on cost basis and only the basic fare is computed and certain components like fuel price are all computed by the airlines themselves.
During the Question and Answer session in the parliament session, the Member of Parliament of Kengkhar-Weringla Constituency Rinzin Jamtsho raised the question on exorbitant airfare.
With regards to that, the Minister of Foreign affairs and External Trade Dr Tandi Dorji said “All over the world, the airfare has increased, in Asia region, the airfare has increased by 35%, Europe by 17% and America by 25%. Comparing it to them, ours is only 12% increase. As the jet fuel is very expensive and during the pandemic, the airlines did not operate business, they had to retrain their staffs, which cost quite a lot. That is the reason for increases in the airfare.”
He also added that for the Bhutanese nationals, it is relatively cheaper and as for SAARC nationals, their rate was done away with and so they now have to pay the same amount as foreigners.
He also further added that there has been talks of unifying the airfares, of having one airfare instead of two. It was not done so as it will impact the Bhutanese nationals only.
The more expensive jet fuel argument of the two airlines and the government does not hold much water as Indian Oil companies drastically reduced the price of all petroleum products to Bhutan in the last few months and this should include jet fuel.
