Biman Bangladesh Airlines has drafted a new business strategy with special focus on cutting its ticket prices for domestic routes to maximize revenue and turn itself around in the domestic airways market.
The national flag carrier has also decided to improve passenger services on different routes as per its business policies to restore its strong position in the domestic aviation market.
However, the move has irked private aviation operators, who claim the new move will push private airlines into competing on an unhealthy and uneven field, as Biman’s ticket prices would be reduced through using subsidies from the government.
In a recent letter to Prime Minister's Private Industry and Investment Adviser Salman Fazlur Rahman on Sunday, the Aviation Operators Association of Bangladesh (AOAB) said eight private airlines have invested thousands of crores in the industry, but many were forced to shut down their operations as they could not survive in the face of Biman's business strategy.
Biman Bangladesh Airlines has drafted a new business strategy with a special focus on cutting its ticket price for domestic routes to maximize revenue and turn around its position in the domestic airways market.
The national flag carrier has also decided to improve passenger services on different routes as per its business policies, to reinstate its strong position in the domestic aviation market.
Earlier on June 3, the same organization wrote a letter to State Minister for Civil Aviation and Tourism M Mahbub Ali, explaining the pros and cons of the situation and requested the authorities to take effective steps regarding the matter.
Allegations against Biman
According to the private airline operators, they have to pay all charges in cash during the renewal of AOC (Air Operator Certificate) every year, but Biman has a privilege here as it does not need to renew its certificates.
The private airlines also claim that they are struggling to attract passengers as the country’s domestic aviation sector is trying to cope with rising prices of jet fuel and the pandemic.
In contrast, Biman has been getting jet fuel from Padma Oil Company Limited for years without paying anything.
Hence, private airline operators have claimed that these are creating discrimination against other operators.
AOAB also blamed the rise in jet fuel prices and critical decisions over the Civil Aviation Authority of Bangladesh’s (CAAB) imposition of charges as reasons for shutting down many airlines ten years ago.
The Salman F Rahman-owned GMG airlines ceased operations on 30 March 2012, United Airways in 2016, and Regent Airways in March 2020.
Previously, during the first wave of the Covid-19 pandemic, two private operators, US Bangla and NovoAir, reduced their ticket prices for all destinations, whereas Biman could not.
The private airline operators, however, are now accusing Biman of reducing its ticket prices, claiming this change will affect all private carriers, as fuel prices are higher than they were two years ago.
At present, US Bangla dominates 45% of the domestic market, NovoAir 36%, and Biman only 19%. They carry about 550,000 passengers per year, sources said.
What Biman authorities say
Meanwhile, the Biman authorities termed the private operator associations' complaints as exaggerated statements. They also claimed that they are not a subsidized organization, nor do they take a penny from the public exchequer.
Moreover, Biman has raised allegations of money laundering against the private airline operators and urged the government, including the Anti-Corruption Commission (ACC) to have their business activities investigated by the Financial Intelligence Unit (BFIU) under Bangladesh Bank.
Biman made a Tk158 crore profit in the outgoing fiscal year. The figures earlier were Tk133 crore profit in 2020-21, and Tk272 crore profit in 2018-19, according to the Ministry of Civil Aviation and Tourism.
Zahid Hossain, Director of Marketing and Sales (Additional Secretary) of Biman Bangladesh Airlines, told Dhaka Tribune that Biman is not a subsidized company, but rather runs with its own income.
"We take loans, and repay them with interest. Biman doesn’t do business with subsidies,” he said.
The Biman official said the authorities of the airlines are now working on a new business strategy to turn Biman into a competitive airline.
A number of initiatives will be undertaken, including the expansion of cargo business, he noted.