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Overview of the Domestic Aviation Industry in Bangladesh - Business Inspection BD
On January 1st, 1972 independent Bangladesh’s civil aviation journey began with Captain A. Rahim’s Cessna 150 aircraft. Since then, at least 32 airlines have registered in Bangladesh, many of which have come into operation and many have never operated flights, and a few are planning to launch...
businessinspection.com.bd
Overview of the Domestic Aviation Industry in Bangladesh
Syed Abid AhsanDecember 28, 2021
On January 1st, 1972 independent Bangladesh’s civil aviation journey began with Captain A. Rahim’s Cessna 150 aircraft. Since then, at least 32 airlines have registered in Bangladesh, many of which have come into operation and many have never operated flights, and a few are planning to launch flights very soon. Of these, at least 10 passenger airlines have been permanently shut down since the start of operations. Among the airlines currently in operation, there are a total of 45 aircrafts in the country including 21 aircrafts of Bangladesh Biman, 17 of US Bangla, 7 of NovoAir. Air travel has helped in the economic development of the country by making the transport sector more efficient.
Overview of Domestic Aviation Industry
Established in February 1972, the state-owned Biman Bangladesh Airlines is the first airline company in Bangladesh. The first aircrafts in the aircraft fleet were a Vintage Douglas Dakota and Douglas DC-3. Domestic operations began with the purchase of four Fokker F27 aircraft, which were used to transport passengers from Dhaka to Chittagong and Sylhet. Until 1993, Bangladesh Biman had a monopoly in the aviation industry. Over the decades, the airline gradually expanded its fleet and routes.There are a total of 8 airports in Bangladesh, of which 3 are international and 5 are domestic. International airports include Hazrat Shahjalal International Airport-Dhaka, Shah Amanat International Airport-Chittagong and Osmani International Airport-Sylhet. On the other hand, domestic airports are located at Cox’s Bazar, Rajshahi, Jessore, Syedpur and Barisal.
There are 3 international and 5 domestic airports in Bangladesh
After the Air Parabat in 1993, several other private airlines including GMG in 1996, United in 2005, A Royal Bengal in 2006, Regent in 2010, NovoAir in 2012 and US-Bangla in 2013 started their operations. Amongst the private airlines, only NovoAir and US-Bangla are currently operational. Regent has stopped their operations since the beginning of covid. In other words, at present there are 4 scheduled airlines in this industry including Biman Bangladesh, out of which 3 are operational. Many airlines have stopped operating in Bangladesh due to lack of proper business policy, improper marketing strategy, low brand image, air agreement rule violations, and financial crisis. Among the 3 private airlines, US-Bangla alone has acquired about 50% of the total market.
US-Bangla is the largest private airline in Bangladesh based on fleet size with 16 aircraft in its fleet and NovoAir is in the second position with 7 aircraft. Currently US-Bangla and NovoAir are providing domestic flight services to 8 destinations within the country which are: Dhaka, Chittagong, Jessore, Cox’s Bazar, Syedpur, Sylhet, Rajshahi and Barisal. In addition, a new airline has joined the domestic aviation industry, Air Astra which will launch commercial services in the first quarter of 2022.
US-Bangla and NovoAir offer domestic flights to 8 different destinations across the country
In addition to scheduled airlines, there are two other categories in the domestic aviation industry – charter airlines and cargo airlines. Air chartering is the process of renting the entire aircraft in a non-scheduled manner . Charter Airlines currently has 10 operators, of which R&R Aviation, South Asian Airlines, BRB Air Limited, Square Air Limited and Bashundhara Airways are the most popular. Some airlines also provide air ambulance services.
Cargo airlines, on the other hand, are primarily involved in cargo transport. Such airlines act as sub-contractors to the major passenger transport airlines. At present there are 4 cargo service provider airlines in the country which provide services at domestic and international level. These are Bismillah Airlines, Hello Airlines, Easy Fly Express, and Skyair.
Air passenger growth rate has overtaken the GDP growth rate of the country.
According to the World Bank, along with the growth of GDP the number of airline users has also increased. The Rapid Growth of Business Environment, Improved Purchasing Power, and The Need to Saving Time can be mentioned as important factors for the growth of this industry.
In 2018, the sector provided 129,000 jobs and contributed 449 million to GDP, accounting for about 0.18% of the country’s total GDP (from domestic aviation alone). Industry experts have always been optimistic about this market. According to The Financial Express, Bangladesh’s aviation industry market has doubled between 2010 to 2017. Keeping in mind the trend of 2018, Bangladesh Aviation Industry was expected to grow by 168% in the next 20 years, which was forecast to create new job opportunities in the country and contribute more to GDP. In a recent interview with The Business Standard, the Minister of State for Civil Aviation and Tourism, Md. Mahbub Ali, hoped that the Bangladesh aviation industry could grow almost threefold in the next 15 years.
Despite having good potential, the downtrend of the aviation industry started from the very beginning of the coronavirus pandemic. Right after the outbreak of the virus, the passenger count on the domestic route dropped by 25 to 30%. However, after the lifting of the lockdown and with the resumption of aviation, the country’s tourism as well as the aviation industry began to turn around a bit. The Civil Aviation Authority of Bangladesh (CAAB) reports that between October ’20 and November ’20, domestic aviation grew by 75% to 80% compared to the pandemic situation. While the number of air travel passengers was 2.21 lakh in December 2020, it increased to 2.34 lakh in February 2021 (an increase of 5.88%) in the next two months. According to the Daily Star, the number of passengers almost tripled in the first three months of October 2021. However, despite recovering, the country’s aviation industry has suffered huge losses in the Corona epidemic. From the inception of Pandemic till October 2021, Biman Bangladesh Airlines lost Tk 1,300 crore, US-Bangla Airlines lost Tk 800 crore and NovoAir lost Tk 150 crore.
Biman, US-Bangla, and NovoAir lost 1300, 800, and 150 crore BDT respectively
Current Trends & Opportunities
Changes have also taken place in the domestic aviation of Bangladesh keeping pace with the economic trends. Some practices have gained quite a bit of popularity in recent years.Increasing Demand of Air Travel
Air travel is faster and more comfortable than other modes of transport. Due to the lack of proper maintenance on the highways of Bangladesh, the condition of many parts is bad, due to which the average speed of the roads decreases. As a result, air travel is more convenient for many. For example, the journey from Sylhet to Cox’s Bazar – 528 km by bus or car takes about 12 hours. However, the same route can be reached in just one and a half hours by air travel. It costs 3200 taka which is more than a bus or car. But many passengers nowadays prefer air travel in many cases considering associated Time, Cost and Inconvenience.Especially businessmen who travel by air are able to return to Dhaka on the same day after finishing work in any other districts. Also Bangladesh’s per capita GDP rose from 418 in 2000 to 1968 in 2020. In other words, per capita income has increased more than four and a half (~ 4.71) times. For this reason, many people are now able to afford air travel. As a result, the growth rate of the aviation industry in Bangladesh from 2015 to 2019 alone was about 65-percent (64.7%). Moreover, the use of air ambulances for emergency transport of patients during recent times can be noticed in Bangladesh. The trend of chartered jet use has also started among many.
More Frequent Flights
To meet this growing demand for air travel frequent flight scheduling is another significant trend in the aviation industry .There was a time when there were only a handful of flights a week from Dhaka to big destinations like Chittagong or Sylhet. But now with the increase in demand, there are multiple flights from Dhaka to different destinations of the country in different schedules of the day. As a result, a passenger can book a flight according to his convenience. At the same time, the airlines have started offering business classes on different routes as per the demand of the customers.More International Airport
Biman Bangladesh has recently launched direct flights on various domestic routes. Earlier, Dhaka was used as a hub for every domestic flight. For example, it is now possible to go directly from Sylhet to Chittagong. On the other hand, the Bangladesh government has undertaken a project to internationalize Cox’s Bazar and Syedpur airports. These airports will become regional hubs once these projects are completed. As a result, other commercial airlines can operate direct flights on these routes as well as increase the volume of international flights. But over the years, airlines as well as private companies have started international flights. US-Bangla started international operations on July 17, 2014 and is currently operating on 11 international routes. NovoAir also started international operations on December 1 of the following year and now operates flights on 1 international route.Average Fleet Age
Once operating flights with old or outdated aircraft, but in the last few years Biman Bangladesh has acquired new model brand new aircraft. 2 Boeing 787-8 Dreamliners and 2 Boeing 787-9 Dreamliners were added to the fleet in 2019 and 2 De Havilland Canada DHC-8-400 aircraft in 2020. Due to which the average age of ‘Biman-Bangladesh’ aircraft is currently 8.3 years. These new aircraft are attracting more passengers as well as reducing operating and maintenance costs by increasing fuel efficiency. In addition to the aircraft, US Bangla plans to add three new Boeing 737-800S and four ATR-72-600s aircraft to its fleet, according to the Dhaka Tribune.
Two new aircrafts were acquired by Biman Bangladesh in 2019 – the Boeing 787-8 and 787-9 Dreamliners
Challenges
In terms of size Bangladesh is a very small country. If two airports are located close to each other, it is not sustainable for the airlines to operate flights between those two airports. Also, when traveling short distances, it is more convenient to travel by road if considering the time spent at the airports and check-ins and check-outs. As a result, there is not much opportunity to add new air travel destinations within the country. Moreover, due to several ongoing mega projects, travel by road and rail will become much easier in future. As a result, it will be difficult for airlines to compete with other transports and sustain.Many people in Bangladesh still do not consider air travel as a good option for transportation but as a luxury. As a result, customers do not consider air travel as a substitute for road and rail. This is a significant challenge in the path of growth of the aviation industry.
High Availability of Cars, Buses, Trains and Launches for Domestic Travel is a Threat for the Domestic Air Travel. On the other hand, low or no switching cost and multiple flights on the same route have made the industry quite price sensitive. As a result, pricing is very competitive among the companies operating in this industry.
Recently, almost all the airlines of Bangladesh Aviation Industry have come up with some mechanical problems. Among these are the recent failure of a Bangladesh Biman plane not being able to land for a long time due to a fault in the landing gear, mismanagement at Cox’s Bazar Airport due to a cow trespassing the runway during a plane take-off and the cow ending up being hit on the plane’s wheels. Incidents like the front wheel rupture during the landing of Novo Air planes in 2019 and 2021 have raised questions among the people about the infrastructure and safety of Bangladesh’s aviation industry. Moreover, due to the obsolescence of many airlines other than aircraft, their maintenance is complicated and the cost is high.
Suggestions
Transport systems are developed at various major airports and cities around the world, integrating air travel with all other modes of transport. As a result, passengers are able to travel quickly and very easily in combination with other modes of transport with Aviation as it is connected to Aviation with buses, trains, metros, etc.But all the airports in Bangladesh are a bit far from the city and isolated from other transport modes. Although there are currently plans to connect Dhaka Airport with Metrorail and the Metrorail with Kamalapur station, it will take time till 2030 to fully implement this plan. Until then, the airport can be temporarily linked with other transports.
Moreover, there is no plan to connect aviation with other transports in cities outside Dhaka. Below standard service complaints are often leveled against Bangladesh airlines. Airline staff need to be educated and trained in hospitality management and customer service. Again, the improvement of ground handling in the airports of Bangladesh has become a vital need. Because often the mismanagement of ground handling with luggage becomes an inconvenience for passengers. In the case of aviation, the Civil Aviation Authority charges the airlines for various services of which interest is added if the payment is not made on time. The global interest rate on this invoice is 12%, but CAAB charges 80%, which is not favorable for airline business. If this problem can be solved through mutual understanding, then the development of the aviation industry of this country can be expected.
