The subsidy of Nu 300,000 a flight provided to Drukair is subject to withdrawal after six months if the airline has a good flow of passengers and does not incur loss, information and communications minister DN Dhungyel said at the National Assembly on December 1.
A domestic flight flies from Paro – Gelephu – Yonphula – Gelephu – Paro. Lyonpo DN Dhungyel said that Drukair is given subsidy only on completion of the flight route and not otherwise.
He said that the six months subsidy is given for market stabilisation, which would be followed by a review. “If the airline is doing well and has a good flow of passengers, the subsidy would be withdrawn.”
The subsidy came into effect from November 11 this year.
Dramedtse Ngatshang MP Ugyen Wangdi asked the minister on the rationale and justification of the government to provide subsidy of Nu 300,000 per fight to Drukair.
He added that the amount could instead be used to provide and improve public transportation services in the dzongkhags and gewogs.
Lyonpo said the government invested a huge amount in operationalising domestic airlines and that it would be a waste, if it does not function.
To meet the international standards, the 1.465km Yonphula airport was repaired at a cost of Nu 209 million with support from Asian Development Bank.
He said that on the insistence of the government, the flight from Paro to Gelephu was introduced in December 2015 but had to be suspended a year later as there were no passengers.
When the government informed the airline to resume domestic flights to Gelephu and Yonphula on June 2017, the airline had put up a letter to the ministry on the possibility of providing subsidy.
The information and communications ministry did not act alone, he said, and that it was discussed with finance ministry. Upon study, he said it was found that the airline was operating on loss.
He said the subsidy is provided to Drukair as it is a state owned enterprise and that the subsidy will not be applicable for Bhutan Airlines, which is a private enterprise.
Lyonpo said the domestic flights were introduced to promote equal distribution of tourist, to fulfill the government’s policy on balanced regional development, to provide service to the people, and for balanced economic development.