Subsidizing The Wings Of The Dragon

The following is the state of affairs at the Druk Air’s ticketing counter in Thimphu yesterday: at the peak business hour of 11:08AM, of the ten service counters, only two of them are occupied. I can assure you that this is not a one-off happenstance – I was there day-before-yesterday as well – it was even worst – not even one counter was occupied.

Druk Air Thimphu's Ticketing/Reservation Counters

Any thinking person’s heart would bleed at such a wretched scene. Druk Air has near monopolistic grip over the air transport business in the country. By comparison, it has the largest fleet of aircrafts – it serves the widest network of domestic and international routes and, best of all, as the nation’s flag carrier, it has the assurance of the Kingdom of Bhutan’s sovereign guarantee backing it.

With all that going for it, why is the airline’s booking office looking like an abandoned wasteland (Sa Tong) in Trashiyangtse?

Simple: it got its priorities all missed up; the airline out priced itself out of the market. They drove their potential customers to their competing airlines in the region.

Druk Air is a national flag carrier - it has an obligation far greater than financial profit. Created as a symbol of nationhood, its roles and functions are distinct from those other run-of-the-mill public enterprises. Like the RBA was not created to fight a war but to secure our territorial boundaries, Druk Air was not created to make profit but to make a statement, and to give wings to liberate the Bhutanese people from the bondage of landlockedness. Sadly however, as time went by, the custodians of the organization got their priorities mixed up and the corporation became an organization that is akin to what the Indians have aptly described: Bandarong Ke Haath Mein Nariyal: Coconut In The Hands Of Monkeys.

But it seems like things are going to look up soon. Supposedly, His Excellency the Prime Minister Tshering Tobgay has invited the managements of the two national airlines to let him know how his government might help - if necessary - through subsidies - in order to help the airline companies keep their airfares within the bounds of sanity.

That is the way to go!

Finally, it would appear that realization is dawning on people who matter, that given the limitations imposed by the geographical make of our country, profitable operation of certain enterprises is not possible - unless the government provides them subsidy - in order that they can continue to provide certain critical services that is essential for the development of the country.

Government subsidies to the transport sector is not new - larger and more efficient economies around the world have been doing it, year after year. The European Union (EU) subsidizes its transport sector to the tune of €73 billion. Likewise, the transport sector in China receives a government subsidy in excess of US$130 billion a year. Germany is routinely accused by competing neighbors of continuing to operate its money-losing airports; it continues to subsidize them in a veiled way to gain competitive edge over others.

Remember, subsidizing critical sectors is not a cost to the government – in most cases it is a responsibility.

Druk Air is a critical service provider - on its back rides the all-important tourism industry. Bhutan's tourism industry's success, or failure, hinges on how responsibly the national flag carrier behaves. The government - the elected representatives of the owners of the airline - the Bhutanese public - have placed faith in their representatives to do their job. We are encouraged that the government is now attempting to  live up to its responsibilities.