Sherab Lhamo

The government’s airfare subsidy for Sustainable Development Fee (SDF)-paying tourists is estimated to cost around Nu 96 million, according to Finance Minister Lekey Dorji. The projection is based on the per-ticket cost and the target number of tourist arrivals, as shared during yesterday’s Meet-the-Press session.

The government began offering airfare subsidies to SDF-paying tourists from December 1, as part of an off-season initiative to boost tourist arrivals.

However, the opposition objected the scheme, arguing that the proposed subsidy is inadequate and lacks an allocated budget.

In a letter to the cabinet dated November 12, 2024, the Opposition Party stated: “The airfare subsidy, roughly amounting to USD 125 per person, is unlikely to motivate international tourists to visit Bhutan. Instead, it may trigger market instability once the subsidy expires.”

The Opposition stated that the airfare subsidy constitutes only about six percent of the overall travel expenditure for tourists, whether from the European or American sectors.

In the letter, the Opposition pointed out that no funds were allocated for the scheme in the annual budget passed by Parliament and cautioned that, given the stage of the fiscal year and the nature of the expenditure, using government resources for this initiative, even through technical adjustments within the approved budget, could breach legal provisions under the Public Finance Act 2007.

In response, the Finance Minister said the government has the capacity to spend without compromising financial stability, after meeting recurrent expenses for the 2024-25 fiscal year, amounts to Nu 5.8 billion.

The Finance Minister clarified that the Nu 96-million airfare subsidy could be implemented within the approved budget for the 2024-25 fiscal year, provided it receives cabinet approval, making it compliant with existing laws and financial regulations.

Last year, Bhutan received 7,213 tourists, and the government aims to increase this figure to 9,600 by year-end to boost domestic revenue. The minister outlined the anticipated benefits of the initiative, including increased revenue-to-GDP ratios, enhanced foreign reserves, higher employment in the tourism sector, and a rise in tourist arrivals.

The subsidy per passenger ranges from 5 to 34 percent, averaging 28 percent during the lean months (December, January, February, June, July, and August). For example, the average round-trip airfare from Paro to Bangkok for international tourists is reduced from Nu 77,331.446 (USD 926.68) to Nu 55,678.6411 (USD 667.2026) under the subsidy.

With the subsidy, the round-trip airfare from Paro to Delhi is reduced from Nu 58,551.858 (USD 701.64) to Nu 42,157.3378 (USD 505.043).

Drukair expressed optimism about the subsidy’s impact, aiming to attract more passengers across all sectors, particularly during traditionally low-season months. “We expect this initiative to significantly boost passenger numbers during these periods,” said a Drukair official.

While Bhutan offers year-round tourism opportunities, most visitors typically arrive during the spring and autumn seasons. By introducing subsidised airfares in the off-season months, the government hopes to shift this trend. The strategy aims to attract more visitors, diversify the tourism calendar, and optimise infrastructure and resources, according to the official

Tour operators welcomed the move, anticipating a potential 15 percent increase in tourist arrivals next year.