There are several ways to bring in tourists-MoICE Minister
In a tight contest within the National Assembly (NA), one vote defined the predicament of airfare subsidy. While 21 members were against it and wanted the subsidy to be done away with, 20 members wanted it to continue.
In the discussions that followed, the minister, Ministry of Industry, Commerce and Employment (MoICE), Namgay Dorji said there are several other alternatives to bring in tourists and asked stakeholders of the hospitality industry not to worry.
Concerning the airfare subsidy, the minister said it has not even been six months since the subsidy was introduced and that more time is required to ascertain if a policy or decision is right or wrong.
Meanwhile, this comes in the wake of the NA’s Economic and Finance Committee’s Review Report on the National Budget for the Financial Year 2025-2026. “The committee observed allocation of Nu. 49.5 million for airfare subsidies with the intention of achieving the tourist arrival target of 250,000 tourist annually,” the Report says. It adds that while the committee acknowledges the need to boost tourist numbers, it is noted that the subsidy is too insignificant to incentivise SDF paying tourists. “Besides, this initiative contradicts the policy of high value and low volume tourism policy. There is also very little or no evidence to prove that this program has brought about positive impact from nu. 49.5 million the government spent during the last lean season.”
“The committee recommends the government to do away with this initiative,” the report states.
The committee’s recommendation is similar to what the National Councils’ (NC) Economic Affairs Committee (EAC) had recommended. The NC’s EAC said that the Royal Government’s airfare subsidy initiative during off-peak seasons has resulted in the marginal increase in tourist arrivals (4.6%) suggesting a limited impact of the current subsidy measure. However, it mentioned that in the absence of strong evidence linking growth to the subsidy, the effectiveness of this initiative remains questionable.
“While the Royal Government’s initiative to provide airfare subsidy for full-SDF paying passengers during the off-peak months was well-intentioned, the results indicate that there is an increase of just 657 passengers or a growth of 4.6%, compared to the same period in the previous year. Since there is no clear evidence that this growth is linked to the subsidy initiative, the committee recommends the Royal Government to discontinue the airfare subsidy,” the committee stated.
The subsidy, which was launched on November 11, 2024, had the Opposition Party writing to the government to do away with the subsidy. Apart from stating that the policy requires careful reconsideration, the Opposition Party had mentioned that the subsidy scheme deviates from the nation’s well-established ‘high value, low volume’ tourism policy. The party further said that reduction of international airfares to SAARC levels through subsidy directly contradicts the objective of Sustainable Development Fee (SDF) which was aimed at making Bhutan a high-end tourist destination.
The Opposition had also said that the airfare subsidy distorts the consistency of policy narrative which is critical in guiding the development strategies and in gaining the trust and confidence of the stakeholders including the tourists. It also noted that the airfare subsidy which roughly amounts to USD 125 per person may not motivate the international tourists to visit Bhutan but trigger market instability upon expiry of the subsidy.
In response, the Ministry of Finance had stated that the subsidy is a price subsidy to lower the cost of air tickets for the SDF-paying tourists only and not for all travelers. The Ministry said it was to encourage the SDF-paying tourists to visit Bhutan during the lean season. The Ministry called it an investment that is expected to increase the number of tourists from 7,213 (actual figure for 2023) to over 9,600 tourists from December 2024 resulting in improved domestic revenue generation. The projected subsidy was about Nu 96 million (M) estimated based on per ticket cost and target arrivals.
Tashi Namgyal from Thimphu
