I was indulging in a favourite Bengali pastime, watching a late-night talk show with my father, when the discussion turned to Bangladesh Biman’s plans to buy more aircraft.
The guests lamented Bangladesh’s reliance on foreign airlines, with travelers connecting through overseas hubs to reach their destinations. Their prescription was more planes of our own.
Missing from the discussion were private Bangladeshi airlines. They are ours, too. If there is substantial unmet demand, as officials claim, the government should examine what keeps private carriers from serving it.
My recent US-Bangla ticket from Chittagong to Dhaka offered one place to start. The base fare was Tk2,924. Taxes, fees, and an airline surcharge added Tk1,625, bringing the total to Tk4,549.
My ticket listed these various charges as codes. A National Skills Development Authority ticketing guide helped decode them.
Passengers should pay for the airport facilities and security they use, through transparent fees tied to efficient service costs.
A broad consumption tax also has a different justification from selectively taxing flying. But the excise and travel taxes alone added Tk900, or 30.8% of the base fare.
Where did this extra tax bill come from?
The Excises and Salt Act gives the government authority to levy excise duties on specified domestic services. Fixed passenger duties take the same amount from a cheap ticket as an expensive one. An airline can cut its fare, but the duty stays put, taking a larger share of the lower price.
The government piles taxes onto tickets, discouraging sales or squeezing margins that could help finance private expansion.
Then it guarantees borrowing for Biman. The public gets a double whammy: Passengers pay more today, while taxpayers bear the risk if guaranteed debt goes unpaid. Before underwriting more aircraft, the government should reduce the tax burden and let airlines test whether passengers will support the expansion.
If officials want passengers to choose Bangladeshi airlines over foreign carriers, they should begin by making it easier for private Bangladeshi airlines to compete.
Reducing the ticket-tax burden would be one place to start: Local carriers have warned that higher duties depress demand.
These ticket taxes apply to Biman too. But government-backed borrowing changes who bears the risk of expansion.
When lenders expect the state to cover a shortfall, they have less reason to scrutinize whether new routes will pay. Managers face weaker pressure to make those investments earn their keep.
A guarantee can make aircraft easier to finance without making them commercially worthwhile. Government backing can keep resources committed to an airline that would otherwise have to improve, restructure, or relinquish them to a better operator.
Boeing has confirmed 25 aircraft ordered this year; Airbus announced ten more on October 7.
Bangladesh may need additional capacity. Biman should still demonstrate which routes justify the investment, how debt will be repaid, and whether leasing or competing carriers could provide service more economically.
For the initial 14 Boeing aircraft, the US ambassador announced US Export-Import Bank financing. A sovereign guarantee has also been reported.
If Biman defaults on guaranteed payments, the state must meet its obligations, adding pressure for taxes, borrowing or cuts to other priorities.
CPD’s FY2026-27 budget analysis lists roughly Tk6,257 crore in Biman-related guarantees. That is contingent exposure, not an annual subsidy check or a valuation of these new orders.
If Biman fails to repay the guaranteed debt, the government must pay. Whatever it cannot recover from Biman becomes a loss for taxpayers.
What can be done?
- Keep justified service fees and broad consumption taxes
- Remove additional passenger levies that have no clear economic justification
- Allow entry and route competition so lower costs have a better chance of reaching passengers
- Budget the revenue loss honestly
- For necessary public-service or security routes, specify the service and let qualified carriers bid for a transparent contract
Commercial expansion should depend on passengers buying tickets and investors accepting the risk. Before asking taxpayers to back more seats, the government should make existing seats easier to buy.
It should not impose taxes simply because it can. Each levy needs an economic justification that accounts for the costs it imposes.
Revana Sharfuddin is a research fellow at the Mercatus Centre at George Mason University.
