Druk Air and Bhutan Airlines incur Nu 3.7 bn in losses

The two airlines in Bhutan have been hit hard since March 2020 by the pandemic. The financial loss incurred is so huge, that it would be difficult for the airlines to overcome the loss anytime soon, despite air travel picking up.

Drukair has incurred a loss of approximately Nu 2.5 billion (bn) while the Bhutan Airline (Tashi) has incurred a loss of Nu 1.2 bn approximately since March 2020. Drukair in 2019 had a profit of Nu 343 million (mn), however, after 2020 they ran into loss of Nu 814 mn in 2020, Nu 1.1 bn in 2021. The total loss projection for 2022, as of June, is Nu 665.7 mn.

The loss projection for Drukair in 2023 is Nu 444 mn. Nevertheless, their profit projection for 2024 is Nu 264 mn.

Though the numbers of travelers are increasing, the airlines feel that it would be difficult to recover the losses incurred so far, at this rate. It might take years to recover, they shared.

The Chief Executive Officer (CEO) of Drukair, Tandi Wangchuk, said that with more relaxation on the COVID-19 protocol by the government, and with further announcement on the reopening of the tourism sector starting 23 September, they are expecting an increase in number of travelers.

He said, “We have been gradually increasing the number of flights. We have increased our flights to four times a week to Delhi, Bangkok, and two times to Kolkata from a weekly flight to Delhi, Bangkok and Kolkata.”

Drukair has also restarted their schedule flights to Kathmandu, Dhaka, Bagdora and Singapore and will increase the frequencies to these destinations depending on number of travelers.

“Therefore, we have redone our forecast for 2022 and have reduced our loss from Nu 1.39 bn to about Nu 1.1 bn. We further forecasted that we will be able to make profit for the year 2024. We will reach the pre-COVID-19 situation only by 2025,” he added.

The main challenge for the airlines is meeting the operational expenses, as there is not much revenue earned. Moreover, while they are trying to increase flight frequencies, getting suitable slots at airports are becoming challenging as the airlines are mostly targeting the same prime time slots.

Also, in the past few months, the traveler-traffic is asymmetric with more passengers in the outgoing flights and less in the incoming flights, he said.

He further said that they look ahead optimistically to the arrival of international visitors, even with the new tourism policy in place.

An official from Bhutan Airlines said that it would be difficult for the company to recover the losses, as it is huge, and may take even 10 years to come back to shape. Though they have published their flight schedule few days after the government’s announcement on the reopening of tourism, getting bookings is a major challenge.

“We are not sure of why we are not able to get a booking. There could be two possible factors. One is either because of the new SDF and increased airfare, or it can be because the number of tourists, itself, has reduced,” the official added.

Bhutan Airlines increased its airfare rates to overcome the losses they have incurred. For now, they just have one flight a week from Paro to Bangkok, however, they will increase their flights starting 23 September, when Bhutan fully opens its border, with four flights to Bangkok, Delhi, Kolkata and two flights to Kathmandu in a week after 23 September. Moreover, they have recruited 20 new staff making it to more than 100 staff.

The official said, “There are a few days where the booking is full while there are days where we hardly have any passengers. Even though we do not have a passenger, we do not cancel our flights.”

It was learnt that while they are continuing with some procedures of the COVID-19, they are still guided by the guidelines issued by the National and Airport Task Forces and other relevant authorities. 

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