Public sector companies suffer as a result of competition from the private sector
DHI: When faced with competition from the private sector, it’s difficult for public sector companies to perform, the Druk Holding and Investment’s (DHI) chairman, Dasho Sangay Khandu, said, referring to Bhutan Telecom and Drukair.
Except for Bhutan Power corporation, Bhutan Telecom and the Bank of Bhutan, the rest of DHI-owned companies recorded a decline in profit last year. Drukair and Dungsam Cement suffered losses.
The chairman said that with the economy’s sluggish growth, companies are not expected to do well, but Drukair suffered a loss to the tune of Nu 130M last year. In 2013, it earned a profit of Nu 217M.
Drukair’s loss is attributed to competitive sectors, resulting in fare reduction to protect market share. The company lost about 52,555 customers, and was asked to venture into new routes, resulting in more investment.
The company also faced a toll on attrition of experienced pilots and engineers. Drukair had to hire pilots from the international market, which led to higher overhead costs.
The officiating chief executive officer, Rinzin Dorji, said it was extremely difficult to retain employees. “It takes about eight years for a new pilot and engineers to become full fledged captain and engineers,” he said.
Drukair’s revenue dropped by eight percent to Nu 2.97B (billion) last year, due to increased operating expenditure.
Dasho Sangay Khandu said the airline company licensed to operate domestic routes has now abandoned domestic operation and ventured into international routes. “Competition is good in the interest of public, but it should be healthy,” he said.
He said it would be beneficial to the country if Bhutan Airlines was allowed to operate the new routes to attract more visitors.
“If Drukair invests to promote Bhutan as a destination, Bhutan Airlines would also benefit. So who would invest?” Dasho Sangay Khandu said.
A part of revenue drop was attributed to increase in local currency paying passengers and decreased foreign currency paying passenger. The company also offered 50 percent discount to Thai tourists to increase traffic.
With Bhutan Airline’s involvement, the carrying capacity doubled, but traffic increased by only 12 percent.
The airline also saw a 34 percent decrease in cargo ferried, from 791,398kg in 2013 to 523,306kg last year. Excess baggage also dropped from 87,538kg to 63,835kg in the same period.
It operated 4,093 flights last year, five flights less than 2013, and achieved an overall on-time performance of 99 percent.
By Tshering Dorji