Rescue package needed to salvage aviation industry

05 Jun 2020 10:20 AM
Bangladesh should unveil a rescue package and cut various charges to salvage the local aviation industry after it crash-landed because of the coronavirus pandemic, said the very best official of an exclusive airline.

The government has recently announced incentives for various sectors but nothing specific for the aviation sector, said Abdullah Al Mamun, managing director of US-Bangla Airlines.

"If the airlines survive, travel agencies, tour operators and even the hotel industry will survive. Otherwise, you will have extreme anarchy in the aviation and tourism sector," he told The Daily Star within an interview recently.

The comments from the principle executive of the country's most significant private carrier came as the aviation industry in Bangladesh has remained largely grounded, much like those far away, for the last month or two as a way to stop the spread of the killer bug.  

In the middle of March, Bangladesh banned passenger flight procedure with all countries aside from China to support the spread of coronavirus, plunging the sector into mounting losses. The novel coronavirus could inflict a 9 % loss in passenger volumes in Bangladesh in 2020, according to an estimate of the International Air Transport Association.

Loss in passengers will get rid of $190 million, or Tk 1,615 crore in income from airline operators, this season alone.

The first industry to suffer losses because of the pandemic was aviation, Mamun said.

"Today, the coronavirus crisis has become a global problem. Until a vaccine is invented to remove this virus, there is absolutely no potential for providing any definite direction to emerge from the pandemic."

US-Bangla Airlines may be the greatest private carrier with 13 aircraft in its fleet. It operated flights on eight international and seven domestic routes before the coronavirus pandemic upended the aviation sector.

In April 2018, it became the first Bangladeshi airline to fly to China. It had been operating regular flights on Dhaka-Guangzhou route since that time.

With the cooperation of the government, the airline is operating several special flights to bring back stranded Bangladeshis and several cargo flights to keep the country's imports and exports active.

Although most flights attended to a screeching halt, bringing income right down to its knees, the operators need to bear all costs, including aeronautical and non-aeronautical charges, leasing costs, insurance charges, bank interest, staff salaries and office expenditure.

"We are burdened with huge losses as we are sitting idle."

And the longer the pandemic drags on, the bigger the losses.

"I'm not sure when the problem will go back to normalcy. I've no idea when we will go back to the pre-coronavirus situation whether or not that happens. Which means the crisis is likely to be long and deep."

In order to survive with foreign airlines, aeronautical and non-aeronautical charges ought to be waived for another five years. The aeronautical charges on international routes ought to be equal the rates applicable for domestic routes.

If the price tag on jet fuel for domestic routes is fixed at international rate, Bangladeshi airlines can survive in the global competitive market.

The government should lower annual surcharge on arrears to 6-8 per cent from 72 % now. Hangar facilities are urgently needed for passenger airlines.

"In order to reap the advantages of the third terminal, Bangladeshi airlines ought to be sustained."

He touched after various challenges the aviation industry is defined to handle in the coming days.

Private airlines will face extreme pressure when it comes to retaining jobs of a huge number of people.

Maintaining the workforce, reducing the losses and sustaining the service will be a huge challenge, he said.

Many established airlines all over the world could go bankrupt. Budget airlines will probably have no concept. Unreasonable rental competition may very well be reduced.

"My idea is that your competition to raise the number of passengers will decrease."

At present, travel could be availed at relatively low fares in the aviation sector around the globe.

In the changed context, you will find a possibility of trimming the quantity of passengers and at exactly the same time there is a probability of increasing the fare.

With respect to the size of the aircraft, the airlines should be able to carry 70 % passengers on international routes and 50 per cent passengers on domestic routes, the CEO said.

At present, 70 per cent market share of the Tk 8,400-crore aviation market in Bangladesh belongs to foreign airlines and the others 30 % to domestic airlines.

Bangladeshi airlines account for 0.3 % of the national income.

"When there is no direct cooperation from the federal government, the existing market share is likely to head to foreign airlines, depriving the government of direct foreign exchange earnings."

The neighborhood airlines industry hasn't flourished in Bangladesh despite having potential. 

The annals of the country's private airlines is not lengthy. Earlier, the state-owned airline was the only carrier, Mamun said.

"State institutions have some advantages that private companies don't have. We need to accept these limitations."

Sometimes, private operators face unequal competition. Conducting business becomes difficult.

"My point is: give us a business parallel environment. Then we are able to give more earnings to the government, more investment will come and this will enrich the economy."

Lack of experienced manpower, shortage of pilots, inadequacy of aeronautical engineers will be the barriers. There is shortage of boarding bridge, too.

The cost of jet fuel is relatively high. The import process of aircraft or aircraft equipment is complex.

"If the problems are addressed, the aviation industry in Bangladesh gets the potential to go forward."