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Drukair proposes dividing domestic market

Both airlines share the view that the local market is too small for competition

Aviation: While the government is yet to make a decision on whether Tashi Air should resume domestic air services, national airline Drukair has informed the civil aviation department that it cannot operate to the Yonphula and Gelephu domestic airports.

Drukair has also proposed that the domestic market be divided between the two airlines.  It has suggested that, while it continues operating to Batpalathang airport in Bumthang, Tashi Air can monopolise the Gelephu, Sarpang and Yonphula, Trashigang sectors.

Drukair is attributing its decision to shortage or unavailability of aircraft.

The airline uses a 48-seater ATR aircraft to fly domestically.  Currently, Drukair only operates to Bumthang, given that Yonphula airport is closed for major structural work, and Gelephu is not yet open.

The ATR aircraft is also used for flying internationally to Kolkata in India, Kathmandu in Nepal and, most recently, Dhaka, Bangladesh.

Drukair flies to Bumthang thrice a week.  However, flights are currently suspended until February as the aircraft is undergoing maintenance in India.

“Now, if we try to do Gelephu and Yonphula, we find it’ll be a big challenge for one aircraft,” Drukair CEO Tandin Jamso said. “As far as Gelephu and Yonphula are concerned, I don’t think we’ll be able to operate, and we feel that Tashi Air should start operating to Gelephu and Yonphula.”

Tashi Air was allowed to suspend its domestic operations in 2012, on condition that it recommenced a year after it started its international services.  It was supposed to have recommenced domestic services in October, last year.  However, the airline has appealed to the government for either a two-year deferment on the requirement, or for the entire domestic sector to be monopolised by either Drukair or Tashi Air, on grounds that the domestic market was not large enough for both airlines, and that its international service was yet to even break even.

Drukair CEO Tandin Jamso said that, if Tashi Air operated to Gelephu and Yonphula, Drukair would not compete on these routes until the market required a second airline and Tashi Air was not able to handle the extra demand.

“I don’t think that we, in anyway, would want to compete and operate to Gelephu and Yonphula, when Tashi is operating, because we’ve seen that it isn’t really feasible for two airlines to go into the same small market,” Tandin Jamso said.

On why Drukair will continue to operate to Bumthang, the CEO said that the national airline had consistently been operating there for the past year, and that its pilots have gained much experience and confidence.  He added that continuation of services meant higher safety and reliability for passengers.

However, the Batpalathang, Bumthang route currently provided the most reliability in terms of demand as Yonphula is scheduled to reopen only next year, and demand for Gelephu is yet to be determined.

In fact, road-widening work on the East-West highway led to a significant jump in demand for flights to Bumthang the last tourist season.  On some days, as many as four flights had to be conducted.

But Tandin Jamso also pointed out that from Drukair’s perspective, Batpalathang airport was not adequately constructed to handle two airlines.  He said the lack of a taxi way and apron meant aircraft had to be parked on the runway, allowing for only one aircraft to use the airport at a time and that storage facilities for equipment were not provided, requiring the airline to build it themselves.

However, he also said that Drukair would not try to stop Tashi Air from operating to Bumthang if it so chose, that is, if it has to resume domestic air services.

Tashi Air CEO Phala Dorji said that he was unaware of Drukair’s proposal. He said that Tashi Air would only respond once a government directive has been issued.

However, he pointed out that if the proposal is “true” then it would be similar to asking Tashi Air to operate to two untested markets and bear potentially more losses. He added that the private airline as a new start up is already struggling on its international services.

Phala Dorji said that Tashi Air will continue to insist that the domestic market be granted as a monopoly to only one airline. He said that it is expected that a joint meeting will be called to further discuss the issue.

Information and communications secretary Dasho Kinley Dorji said that the ministry would make a decision following a study. “Now we’ve proposals from both, we’ll study and analyse both,” he said.

Dasho Kinley said that the ministry would make a decision that was in the best interest of those who would be availing domestic air services.  No time frame on when a decision will be made was provided.

Gelephu airport is scheduled to open for scheduled flight operations next month. So far, almost Nu 240M has been spent on its construction.

Likewise, Yonphula airport, which was closed more than a year ago, is scheduled to reopen only in July 2016. Around Nu 12M or around USD 200,000 has been spent on its development. A further USD 1-4M will be spent to enhance it.

Gyalsten K Dorji, Paro

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