Civil aviation authorities set to take legal actions against domestic carriers
Over two dozen domestic and international airline operators owe the Civil Aviation Authority of Bangladesh (CAAB) a large sum of money, even though some of the airlines have closed operations in the country over the past many years.
The Anti-Corruption Commission (ACC) recently raised questions over why CAAB had failed to realise the dues, amounting to over Tk5,000 crore, from six domestic and 25 foreign airlines for over 30 years.
CAAB is set to take legal action against the domestic airlines after repeatedly issuing warnings in previous years, while multiple letters have been sent to the foreign airlines through the Ministry of Foreign Affairs.
Among the six domestic airline operators, only the national flag carrier Biman Bangladesh Airlines and the private airlines US Bangla and Novoair are currently operating regular flights. Only two out of the 25 foreign airlines - Ethiopian Airlines and Thai Airways – are operating flights to and from Bangladesh.
According to CAAB, domestic airlines are in arrears for an estimated Tk5,308.40 crore and international airlines for Tk172.81 crore as of March this year. The figures include VAT, income tax and surcharge.
The dues have accumulated over 35 years, from 1986, and have been consistently increasing by 6% per month.
ACC: What steps have CAAB taken?
CAAB, in its latest annual report on the arrears of airways, said it was continuing to send letters to various domestic airlines regarding arrears. No information was received from the department concerned regarding the collection of dues from foreign airlines.
Subsequently, the ACC sent a letter to CAAB asking why it was in arrears, and whether irregularities and negligence of officials were a factor in the failure to collect dues.
The commission also asked what steps were being taken to identify defaulters and recover the arrears.
CAAB sources said they had received the ACC’s letter, but were yet to send a reply.
How did the airlines turn into loan defaulters?
A lack of proper business policy, crisis of passengers, increases in jet fuel prices and many other reasons for arrears were mentioned in the CAAB assessment.
Many of the airlines defaulted on massive loans and suspended operations, especially since the outbreak of the Covid-19 pandemic, but action was not taken against them immediately in the belief that they would resume operations, CAAB officials said.
The national carrier has attempted to pay its loans and continue flight operations, but it too has been facing problems due to unplanned business policies and the Covid-19 pandemic, they added.
Foreign airlines did not follow air agreement
Foreign airlines also faced problems with business policy, passenger numbers and fuel prices that led them to default on loans, CAAB sources said.
One official said: “According to the air agreement, if any airlines want to operate in any country, then they have to follow some mandatory rules. These include paying dues on time and notifying in writing before closing flight operations.
“A number of defunct airways did not follow the rules and shut their business here without paying dues,” he added.
CAAB has not taken action against the foreign airlines beyond sending them letters as they do not wish to risk hurting diplomatic ties, the official further said.
What do the airlines say?
When contacted, United Airways Director Kazi Wahidul Alam said the airline would pay dues as per business policy after meeting with CAAB on the matter.
A Regent Airways official said: “We will have to pay a substantial amount before operating flights again.”
Biman Managing Director and CEO Abu Saleh Mostafa Kamal said: “We try to recover losses by reducing operational and other costs. It will be easy to pay the arrears once we return to full operations.”
Dhaka Tribune could not reach officials of the foreign airways for comment.
CAAB may take legal action against domestic airlines
CAAB chairman Air Vice Marshal M Mafidur Rahman said: “Due to bilateral relations and aviation agreements, we have written to the foreign airlines through the Ministry of Foreign Affairs instead of filing a case. Efforts are being made to collect the dues through negotiations.
“However, we will file lawsuits against domestic airlines if their arrears are not paid. Their aircraft will be auctioned soon which are now in cargo village at airport,” he added.
Earlier, CAAB filed two cases against United and Regent Airways, which are now pending in court.