Dollar crisis shaking aviation industry

The dollar crisis in Bangladesh has forced foreign airlines to cut down flight numbers and increase ticket prices, according to a foreign airline insider.

Foreign airlines have also changed their ticket selling policy to “sell outside, travel inside,” so that they can easily repatriate their funds and cut down on aviation related payments, such as for jet fuel.  

Criticizing the ticketing policy, domestic aviation stakeholders said it would create turmoil in the domestic aviation sector and threaten the livelihoods of those who are involved in the industry. 

Aviation expert Kazi Wahidul Alam said: “Foreign air operators are operating flights in order to make money. If they stop making money, then they will stop operating flights to and from Bangladesh and that will hurt the country's image.”

He urged the government to find a way to bring money into the country to ensure the aviation industry's survival.

According to airport sources, currently a total of 28 foreign airlines operate an average of 140 flights per day to and from Bangladesh.

Among the foreign airlines, Turkish Airlines recently reduced weekly flights from 14 to seven, while Singapore Airlines cut them down from 10 to seven. Malindo and Cathay Pacific previously operated 5 flights a week, but now operate just one.

Emirates currently operates 21 flights per week and so far has no plan to reduce its flight frequency, while Air Asia increased flights from 18 to 28. Other airlines have kept their flight frequency unchanged.

Officials of Qatar Airways, Singapore Airlines, Emirates, Saudia, Turkish Airlines and Malaysia Airlines said foreign airlines have been struggling over the last nine months due to the global economic crisis.  They had sought help from the  International Air Transport Association (IATA) to find a solution.

Later, IATA wrote to the Bangladesh government to address the issues faced by the airlines. Subsequently, a meeting was held between Bangladesh Bank and foreign airlines in late December.  

During the meeting, Bangladesh Bank held out the assurance that it would mitigate the problems of the airlines and stressed that there was no bar or restriction from the central bank. 

According to central bank officials, they have so far been unable to find effective solutions for the foreign airlines due to the continuing foreign currency shortage.

Mulling the situation, the IATA  has urged governments to remove all barriers to airlines repatriating their revenue from ticket sales and other activities, in line with international agreements and treaty obligations.

According to the IATA, the amount of airline funds being blocked from repatriation by the government has risen by over 25% ($394 million) in the last six months to nearly $2 billion currently.

According to foreign airlines sources, an average of $15-30 million was stuck in Bangladesh from each airline. Around $27 million from Turkish Airlines and $20 million from Salam Airways has not been allowed to be repatriated.

Qatar Airways could remit around $2 million, while Turkish Airlines repatriated $5 million in the last month.

Domestic ticket agencies fear losing market

The Association of Travel Agents of Bangladesh (ATAB) has expressed concern and written a letter to the Ministry of Civil Aviation and Tourism asking it to mitigate the issues caused by foreign airlines reducing their flight frequencies.

Domestic ticket agencies criticized the foreign airlines' new ticket selling policy, saying "it would cause turmoil in Bangladesh's aviation sector, tourism industry, and travel agency business unless the government quickly releases all outstanding funds of the airlines."

Some foreign airlines have already started selling tickets through foreign ticket agencies instead of local ticket agencies to avoid dollar shortages.

When asked about the ticket selling policy, wishing anonymity, some foreign air operators told Dhaka Tribune: " Airlines have been forced to adopt this policy so that they do not have to stop sending back funds."

Blaming the transaction policy of Bangladesh Bank for this crisis, they said they have asked the Civil Immigration Regulatory Body to take steps to stop financial transactions through hundi by restricting ticket selling through external agencies and bringing everything under strong monitoring systems.

Abdus Salam Aref, general secretary of ATAB, said some passengers were purchasing air tickets through Indian ticket agencies using foreign IDs.

He added that increased transactions through hundi were depriving the government of VAT and other taxes.

Recently, CAAB Chairman Air Vice Marshal M Mafidur Rahman said,  “We are very alert about dollar smuggling. We have boosted supervision at checkpoints to prevent illegal money transfer through hundi.”