Council: The government stands by its decision to grant Tashi Air a total extension of seven years to resume their domestic services in the country.
Information and communications minister, DN Dhungyel, during the question hour session of the National Council yesterday said that the decision to provide Tashi Air with the extension was based on several reasons.
Addressing the question raised by eminent member Phuntsho Rapten, Lyonpo DN Dhungyel said that the domestic air service business is not profitable even for one airline currently. He said that last year, Drukair, the only domestic flight operator today, carried a total of 4,676 passengers from Paro to Bumthang which averages to 16 passengers per flight.
“And this year in five months, Drukair carried 2,588 passengers from Paro to Bumthang, averaging 19 passengers per flight,” said Lyonpo. “If Drukair wants to attain the breakeven point, where there is no profit nor loss, when it flies from Paro to Bumthang the airline has to have a minimum of 25 passengers per flight which is clearly not the case here.”
The minister said that while the extension was approved, the government had only two options to work with. “The first option was to either follow the agreement and ask Tashi Air to resume domestic services failing which it could have led to the closing of the airline as a whole,” said the minister. “The other option was to identify and study opportunities for domestic flights in the country by giving Tashi Air some time.”
Lyonpo said that understanding the real problem and working to improve the services for the future is important. “Closing down the airline will be the easiest job for us but will closing the company on the basis of the agreement solve the problem,” he said. “Had we not given the extension and compelled the airline to resume domestic services besides its heavy loss, the airline after sometime would have left the market on its own. Would that have served the purpose?”
The minister also pointed out that without any competition in the market there would be a monopoly. He also said that apart from affecting the public and tourism sectors, around 165 employees of the airline would become unemployed if the company shut down. “In 2015, the airline suffered a loss of almost Nu 210 million,” said Lyonpo.
However, eminent member Dasho Tashi Wangyal disagreed with the minister. He said that the small market hampering the domestic service business in country is not correct if they are to go by what the minister had said earlier.
Quoting the minster, Dasho Tashi Wangyal said that on November 28 last year, when the minister was asked if Gelephu airport would be profitable, he said that the minster had said, “demand should not be a prerequisite for introducing air services.”
Dasho Tashi Wangyal added that the CEO of Tashi Air had said that the company is now more stable and reliable, which is why it was extending its flight network to two more countries, and the issue of loss should not be a concern for the government.
“If competition is essential in improving services, it should not only be for international flights,” said Dasho Tashi Wangyal. “Why is the government hesitating to ask Tashi Air to resume their domestic services?”
Lyonpo DN Dhungyel said that the government had approved Tashi Air to fly international flights to recover from the loss the company suffered before. “Apart from this the government does not give any subsidies to the airline like they do for Drukair,” he said. “It is not that just because Tashi is a big company, we are not able to tell them. A detailed and proper study needs to be done when it comes to flight services.”
The minister said that providing flight services is totally different from providing other services and it requires proper investigations. “We are supporting the airline because it is the only competition that we have currently in the market and not because of any other reasons.”