Private airlines of BD bears heavy burden of illogical charges
Dhaka : The struggling private airlines of Bangladesh are burdened heavily with illogical, as well as not so justified government-imposed charges, when the nascent domestic airline industry needs all types of positive support for survival.
The aeronautical charges have become a big load for the local private airlines and some of the carriers have become defaulters. There is pressure to pay the charges regularly with arrears. AOC of two of the four private airlines are under threat because of non-payment of these charges on regular basis.
In three months between November 2014 and January 2015, leaders of all the four private airlines of the country twice met Rashed Khan Menon, Minister for Civil Aviation and Tourism, to discuss various problems of the industry including aeronautical charges.
One of the demands of private airlines is waiver of all aeronautical, landing and parking charges for both domestic and international operations for five years. If that is possible, then charges for both types of flights be fixed at the rate of domestic operations.
The meeting in January this year decided to form a three-member committee to study aeronautical and other charges of different countries to prepare a comparative report. They also requested the defaulter airlines to pay all current with arrears, as decided earlier to avoid complication in AOC renewal.
According to the private airlines of the country, they are to pay aeronautical, landing and parking charges at different rates for domestic and international routes. Moreover, the charges are very high, compared to similar charges in different countries of the region.
The domestic airlines of Bangladesh are being charged for landing at two different rates. One for flight originating and terminating within domestic routes, and the other for flight departing from foreign countries while returning home.
Landing charges
At domestic routes of Bangladesh, the landing charges for Airbus A310 is US$ 312.27 and for MD-83 US$ 137.93. While returning home from foreign destinations, the charges jump to US$ 1968 for A310 aircraft and US$ 711.25 for MD-83 aircraft.
Compared to some airports in the region, landing charge at Hazrat Shahjalal International Airport is considerably high. Compared to Dhaka, landing charge for A310 in Kolkata is US$ 1721 and for MD-83 US$ 676; in Bangkok US$ 790.5 and US$ 361.06; in Karachi US$ 1348.08 and US$ 600.06; in Kathmandu US$ 1022 and US$ 760; Kuala Lumpur US$ 575.57 and US$ 244.17; in Myanmar US$ 760 and US$ 253; in Muscat US$ 469.04 and US$ 280.78 and in Jeddah US$ 1200 and US$ 586.
Parking charges
Similar to landing charge, there are two rates of parking charges_ one for flight originating and terminating with domestic routes and the other returning home from foreign destination_ imposed on the airlines. Parking charges for A310 domestic flight US$ 7,708 and international flight US$ 38,671.20. For MD-83 the rates are US$ 2,710.31 and US$ 13,986.08 respectively. For ATR-72 the rates are US$ 456.50 and US$ 3,242.25 respectively and for Dash-8, the rates are US$ 272 and US$ 2,122.20.
It is impossible to understand why return flights of international operation of local airlines are being considered as foreign flights while returning home? Private airlines are fighting for long to make uniform landing and parking charges-fixing at rates applicable for domestic routes. But so far, there is no sign of positive action.
High interest charge
Late payment interest charge, imposed by Civil Aviation Autho-rity of Bangladesh (CAAB) on private airlines is also very high-yearly 72 per cent. Compared to this very high interest rate on late payment, India is charging only 12 per cent. In Pakistan it is IR plus 02 per cent; in Thailand IR plus 2 per cent; in Oman it is 10 per cent; in Malaysia it is 12 per cent and in Singapore it is 8 per cent.
These much higher CAAB charges are making operational cost of private airlines high. In the age of stiff competition, there is no way to distribute these operational costs on the fares. So, private airlines find it very difficult to carry financial burden for long.
Not a happy history
A look at the short and troubled history of the private airlines will show that the rate of survival of private airlines of Bangladesh is comparatively very low. Since the opening of airline industry to private sector, more private airlines have gone out of operation than the number now flying.
Aero Bengal, Air Parabat and Royal Bengal Airways, Best Air and GMG have already become history. Only four private airlines including two fairly new_ United Airways, Regent Airline, Novo Air and US-Bangla Airlines are now in operation. Operation of two older private airlines_ United and Regent are, however, not trouble free.
It is sad to say that the brief history of the private airlines of the country is not a happy one. There are number of reasons_ some external and some internal for the situation.
Apart from some external problems, the private airlines lack expertise in key areas of airline industry like– strategic planning, fleet planning, managerial skill, route planning, aviation economics and operational efficiency. Most importantly private airlines lack adequate fund for running an airline.
More than two decades have gone
It may be recalled that in 1993, the government in its bid to catch up with the rest of the world, decided to allow private airlines to operate, restricting to selected domestic routes and Short Take-off and Landing (STOL) aircraft. However, few years later the government decided to liberalise the operation of private airline and withdrew the restrictions imposed earlier. The government allowed the private airlines to operate on any domestic routes using any aircraft. Early in the first decade of the current century, regional and international routes were also opened to private airlines.
Along with corrective measures to remove the weaknesses which badly hitting private airlines, there is need to infuse efficiency in the management.
Healthy market, but
International traffic to and from Bangladesh has experienced steady growth in recent years. The majority of Bangladeshi migrants’ workers are in the Middle East. The Middle East is unsurprisingly the nation’s largest international air market.
Despite presence of huge ethnic traffic, the private carriers have failed to gain healthy market share. It is also interesting to note that private airlines in the country remain in good shape when operation is limited to domestic routes. Trouble starts when they start international operations.
The private airlines found to start international operation without proper study and efficient manpower to support.
Along with expansion of routes without proper market survey, the selection of aircraft type is also found to be not very appropriate. The procurement of old gas guzzler aircraft, either through lease or purchase, cannot be considered as judicious decision, when cost of fuel is so important in respect of cost of operation.
True fuel price is hitting airline industry hard. But no airline in other countries has so far shutdown operation only because of that. Moreover, private airlines are mostly operating on high-density Middle East routes. There was no dearth of passenger traffic. So; the fuel price alone cannot be blamed for sorry situation.
The management of the private airlines, which have gone out of business, failed to take right decisions at right time and that failure generated negative cascading impact on the operation. Gradually, the airline became sick both financially and operationally. Finally, the airline could not escape shutdown.
Govt inaction
Except taking decision to allow private airlines to operate_ first in domestic market and later regional and international routes_ the government has done little to help the private carriers in any stage, in any form. Staring from operational license, the private airlines are to cross a number of bureaucratic hurdles in all steps, particularly in getting airworthiness certificate for leased or purchased aircraft, validation of licenses of expatriate cockpit crew. The entire process is cumbersome and time consuming.
The trade believes that the government has responsibility in protecting the interest of private airlines as these are serving public interest. Private airlines are no doubt business venture, but that business is serving travelling public. So, in the public interest, the government must provide at least technical and policy supports to the fledging private airlines of the country.
