Nu confidence

Bhutan airlines?

The government recently approved airfares for our two airlines. This is how the fares were reported in Kuensel:

Druk Air is charging USD 170 (single) and USD 340 (return) for Paro-Bumthang, while Bhutan Air will charge USD 250 (single) and USD 400 (return).

For Paro-Trashigang, Druk Air is charging USD 215 (single) and USD 430 (return). Bhutan Air is charging USD 350 (single) and USD 600 (return).

From Bumthang to Trashigang, Druk Air will cost USD 110 (single) and USD 220 (return), while Bhutan Air costs USD 150 (single) and USD 250 (return).

When I read the fares, two questions immediately came to my mind: why so expensive? And why USD?

The answer to the first is straightforward. The fares are expensive because operating costs are high. And unless domestic air travel becomes unexpectedly popular, both the airlines may incur losses, in spite of the government’s generous subsidies.

The answer to the second question is not so straightforward. Why, indeed, are domestic fares denominated in US dollars?

All goods and services in Bhutan should be priced in ngultrum. Unless, that is, we lack confidence in our own currency. And that shouldn’t be the case. Firstly, the ngultrum is pegged to the Indian rupee. And secondly, if air tickets were priced in ngultrum, foreigners would, anyway, have to pay US dollars to buy the ngultrums to purchase their air tickets.

Hard currency would come into the country in any case. So it may seem that there’s no difference whether foreigners pay for their air tickets in US dollars or ngultrums. Actually, there is a difference. If the tickets were priced in ngultrums, banks – and the Royal Monetary Authority – would automatically be more involved in the US dollar transactions and, as such, would also be better able to regulate the movement of foreign currencies.

But more importantly, we would demonstrate to foreigners, and ourselves, that we have confidence in our own currency. And that confidence is crucial for economic growth.

Photo credit: Kuensel

 

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Comments

  1. Dear OL,

    There is certainly more to it. The fixation of prices in US Dollars is a clear indication that the domestic air service was never intended for the use of our own people (when I say people, I don’t mean government servants or leaders). These so called domestic air service are no service but a facility developed keeping in mind the comforts of foreign tourists. Once we understand the government’s priorities, we will get used to accepting these harsh truths. Thinking that the domestic air SERVICE is for comforts of our people was a mistake which we common men made. Rather than expecting direct comforts we should pray that these commercial flights do get enough passengers who may in turn (hopefully) help us build our comforts on our own.

    Just a thought…

  2. Sangay.dorji says:

    Those days when we wanted to start helicopter services there was no subsidies from govt.Today since the players are big seems govt is sanctioning subsidies.
    Why the difference in attitude!
    Here in Bhutan the private and the govt is always hand n glove.Guess we had our hands in the wrong gloves or the other way.
    this is the situation in our country

  3. Sangay.dorji says:

    In Bhutan if we have to do business we must have a silent partner in the government,is it so?That’s what I hear from people.Then ones project gets a smooth sailing till the end maybe even a bail out.

  4. When the Government planned for the Domestic Air service in our country, I really thought that I will be able to send my aging parents to experience the ride on the plane. But with the introduction of the Air fare, I don’t think we the Bhutanese citizens will not be able to use the domestic flight that is introduce in our country. It is as same as Casino at Nepal.

  5. Good information

  6. though the plane service is targetted for the foreigners in mind, but i do feel atleast we could print the fares as Nu. __ ? $ __. Or is it that even the ones who can affort to fly have to pay the fares in dollars???????????

  7. I can not agree more to what OL has pointed out about pricing in USD.

    The local businesses should be priced in NU only.

    On the pricing of air fares the business need to sustain and naturally it will be away from normal people’s reach. But gradually when businesses picks up commoners can reap the benefit.

    The air services are also required incase of emergencies. So air service per se is not an issue here.

  8. Fares are printed in Dollars!

    This could be one of the dangerous lead. lets not hope that in coming days even the Doma will be priced in Dollars.

    we talk lot about our sovereignty but is this the way we implement it. how comes even the domestic airfares are charged in dollars.
    It means we donot value and respect our own currency. we want to be UNIQUE by doing that and want to show STRONG love to hard currencies.

    I THINK THIS TOPIC IS WORTH TO BE DISCUSSED EVEN IN THE NATIONAL ASSEMBLY….

  9. The aeroplanes have to be paid for in US$, the fuel has to be paid for in foreign currency, and the foreign pilots have to be paid for in US$.

    If the price were set in Ngultrum they would need to be set high enough to cover any further decrease in the value of the ngultrum (or increase in the value of the US$)over the period for which the fares are set.

    Just now the value of both currencies and fuel prices is very volatile – several Indian carriers like Kingfisher, Jet Airways and even Indian Airlines are on the verge of bankruptcy. Do we want the Bhutanese airlines to fail before they have hardly got off the ground?

    Instead of aeroplanes perhaps we should thought “out of the box” and looked into using modern airships for our domestic air service. These are far more fuel efficient, environmentally friendly, and do not require the construction of expensive airports and ground facilities. These could have also been a huge tourist attraction in themselves.

    see: http://www.telegraph.co.uk/science/7918762/Airships-a-second-age.html

    Much more in-tune with the values of GNH

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