Friday, 20 June 2008

Bhutan : Druk Air cuts flights to offset fuel hike

19 June, 2008 - Druk Air, the national airline, has temporarily slashed its flight frequency on several routes to deal with the 25 percent average hike for the year 2007-08 in aviation turbine fuel prices and the lean tourist season.

Flights to Bangkok have been reduced to six from eight flights a week, with the Friday flight via Kolkata and the Saturday flight via Dhaka gone to the chopping block. The four flights a week on five routes from Paro to Dhaka, Delhi, Gaya, Katmandu and Kolkata, have been cut by a flight each.

Druk Air expects to make a cost saving of 28 percent of the operating cost, or Nu 6.5 million a week, from the reduced flying frequency.

It is also timely for the national airline as passenger numbers drop in July, August and September, the lean season for tourists visiting Bhutan. “We sometimes have only about 20 passengers when we can carry 114 and, with the increase in the fuel price everywhere in the world, it has now become imperative to maintain costs,” said the deputy managing director of the Druk Air, Tandin Jamtsho, who went on to add that 45 percent of the airline operating cost goes on fuel.

He went on to say that the management was also contemplating increasing airfares. “We’ll be able to work out the airfare in a week’s time and we want to fix the fare by comparing it to the other competitive airlines,” said Tandin Jamtsho. “We’ll make sure that the rise in the airfare will be marginal so that it doesn’t pinch passenger pockets.”

The regular air timetable will, however, resume with the start of the autumn tourist season in October, said Druk Air officials.

A finance officer in Druk Air, Rinzin Dorji, said that aviation fuel price varied from month to month but since mid-2007 the fluctuation was sudden and very steep.

Following the global crude oil price hike, state-owned oil firms in India have increased additional fuel surcharges by Rs 300 on short-haul routes and Rs 550 on long-haul routes per passenger to cushion the 18.5 percent increase in price of aviation turbine fuel in India.

Druk Air sources aviation fuel from India.

The station manager of Bhutan oil distributors (BOD) in Paro, Sonam Namgyal, said that the Grade JET-A-1 aviation turbine fuel (ATF), that has a freezing point of -470C and a flashpoint of 380C, is the most viable fuel for all commercial flights. The fuel is transported from the Hashimara aviation fuel station in West Bengal, India.

Druk Air lifts an average of 50,000 litres a month from the Bhutan oil distributors’ station in Paro. It also refuels at different airports outside Bhutan.

According to Rinzin Dorji, aviation turbine fuel costs Rs 56.10 in Kolkata, Rs 51.88 in Delhi, Rs 65 in Katmandu, Rs 52.95 in Gaya, Nu 54.31 in Dhaka, Nu 43.80 in Bangkok and Nu 63.17 in Bhutan. “The high price in Bhutan is mainly because of transportation, commission and shrinkage charges that BOD include in their selling price of the fuel,” said Rinzin Dorji.

Druk Air also uplifts fuel from Bangkok, Delhi and Kolkata, where the prices are relatively lower.

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