Rescue package needed to salvage aviation industry
Bangladesh should unveil a rescue package and cut various charges to salvage the local aviation industry after it crash-landed due to the coronavirus pandemic, said the top 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 in an interview recently.
The comments from the principle executive of the country's greatest private carrier came as the aviation industry in Bangladesh has remained largely grounded, much like those far away, for the last month or two so that you can stop the spread of the killer bug.
In the center 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 wipe out $190 million, or Tk 1,615 crore in earnings 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 turned into 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 major private carrier with 13 aircraft in its fleet. It operated flights on eight international and seven domestic routes prior to the coronavirus pandemic upended the aviation sector.
In April 2018, it became the first Bangladeshi airline to fly to China. It turned out operating regular flights on Dhaka-Guangzhou route since that time.
With the cooperation of the federal government, the airline is operating several special flights to recreate stranded Bangladeshis and many cargo flights to keep carefully the country's imports and exports active.
Although most flights have come 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 whenever we will go back to the pre-coronavirus situation even if that happens. Which means the crisis may very well be long and deep."
To be able to survive with foreign airlines, aeronautical and non-aeronautical charges should be waived for another five years. The aeronautical charges on international routes should 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 gross annual surcharge on arrears to 6-8 per cent from 72 % now. Hangar facilities are urgently needed for passenger airlines.
"As a way to reap the advantages of the 3rd 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 with regards to retaining jobs of a huge number of people.
Maintaining the workforce, reducing the losses and sustaining the service will be a big challenge, he said.
Many established airlines around the world could go bankrupt. Budget airlines will probably haven't any concept. Unreasonable rental competition is likely to be reduced.
"My idea is that the competition to improve the number of passengers will decrease."
At present, travel could possibly be availed at relatively low fares in the aviation sector everywhere.
In the changed context, you will find a possibility of trimming the quantity of passengers and at the same time there is a likelihood of increasing the fare.
Based on the size of the aircraft, the airlines should be able to carry 70 % passengers on international routes and 50 % 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 rest 30 % to domestic airlines.
Bangladeshi airlines take into account 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 federal government of direct forex earnings."
The neighborhood airlines industry has not flourished in Bangladesh despite having potential.
The annals of the country's private airlines isn't lengthy. Earlier, the state-owned airline was the only carrier, Mamun said.
"State institutions involve some advantages that private companies do not 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 federal government, more investment will come which will enrich the economy."
Insufficient 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."
