Druk Air was established on April 5, 1981 by a Royal Proclamation. The airline commenced its operations on January 14, 1983 using an 18-seat Dornier 228-200. Initially, Druk Air operated from Paro to Kolkata and Dhaka. The airline started Jet services in November 1988 with BAe 146-100 aircraft and subsequently increased its network to link Paro with New Delhi, Bangkok and Kathmandu. The airline was registered under the Companies Act of Bhutan, on May 13, 1991. An Executive Class of 10 seats was introduced by the carrier in 1993. The airline started its service to Yangon, the capital of Myanmar, on January 6, 1997. In 2004, Druk Air dispensed with BAe 146 aircrafts and inducted Airbus A319 in its fleet.
Druk Air carried out its first commercial flights service, with Airbus A319, on October 31, 2004. In July 2005, the Government of India and Government of Bhutan signed an Air Services Agreement, according to which, the number of weekly flights plying between the two countries were increased from twelve to forty nine. The Indian cities of Mumbai, Chennai and Guwahati were included in the routes served by Druk Air. After hikes in the price of oil in 2008, the airline decided to reduce frequencies across its network and announced an increase in its air fare. Nonetheless, the airline continues to serve its country, as it has evolved as a lifeline for the Bhutanese people, to connect to the rest of the world via air.