Many airlines around the world are struggling to meet the cost of human resources in aviation. If an airline takes the initiative to reduce its operation cost, it starts with lying off its staff, then reschedule pay structure, and even sometimes restructure the organogram. The first sector to be affected during the global Coronavirus is the aviation, tourism and hotel industry. Attempts have been made to sustain this industry through different cost cutting. In the long run, the aviation and tourism industry has suffered. Normality has not come yet.
If the dynamism of the airways is maintained then sustainability of other industries is ensured. In order to keep the airspace afloat, various countries have given various incentives to the aviation and tourism industry during the pandemic period, waiving various charges, especially aeronautical and non-aeronautical charges. But it is a matter of concern how much help the aviation industry of Bangladesh, especially the private airlines, actually received?
The only company supplying jet fuel for aircraft is Padma Oil Company, controlled by Bangladesh Petroleum Corporation. The record price of jet fuel in the history of Bangladesh is currently prevailing. The airline has to pay Tk 111 per liter for jet fuel to operate flights on domestic routes and USD 1.09 per liter for jet fuel to operate flights on international routes. Inequality is prevailing here too. Local airlines operate flights on domestic routes and more than 95 percent of the passengers are Bangladeshi nationals. However, domestic airlines and Bangladeshi nationals have to bear extra expenses on this domestic route.
About 40 percent to 46 percent of the operational cost of any route of an airline is borne by jet fuel. However, the price of jet fuel has increased by about 141 percent in the last 19 months since the time of the Coronavirus pandemic. Local airlines operating flights on domestic routes have to pay around Tk 11 to Tk 12 per liter for jet fuel.
There have been a number of inconsistencies between the country’s private airlines and national airlines over the years. As a state-owned company, the state stands by national carrier in any bad time, but as a private airline, it is always being deprived of that opportunity. A few years ago, the state-owned airline was relieved of about Tk 1700 crore in debt, but at that time various private airlines were forced to close down their businesses.
An example can be given about the fare of different routes of the airlines, in 1999 or 2000 the price of jet fuel was about 25 cents or Tk 14 per liter, during then the dollar exchange rate was about Tk 50, then the minimum fare from Dhaka to Chittagong was about Tk 3000. Other charges, including aeronautical and non-aeronautical charges, were one-third higher than at present, while Bangladesh’s per capita income was less than USD 1000.
The authorities concerned should take
a strict look at the cost sectors so
that they do not unnecessarily
affect the aviation business
At present, the price of jet fuel is around Tk 111, per capita income is around Tk 2800, aeronautical and non-aeronautical charges and other charges are almost three times more than before but the minimum fare from Dhaka to Chittagong is Tk 4,500. Yet there is a common statement that the fares of airlines are much higher. Airlines are forced to close down their businesses if there is a huge difference in cost with their revenue. In the last 25 years, in the aviation sector of Bangladesh, especially eight to nine private airlines have been forced to close.
Nine Eleven or Coronavirus pandemic have led to various costs in the aviation sector. Due to the observance of hygiene rules, limiting the number of seats, regulatory authority directives, etc., the operation cost is boasted while the source of income is blocked. There is an extreme disparity between income and expenditure.
Airlines usually do not vary fares for any festival. In Bangladesh, passengers rush is witnessed massively during Eid-ul-Fitr or Eid-ul-Azha or different national days. Many passengers plan their travel and buy tickets in advance at a minimum rate. Meanwhile, another group of passenger who plans to travel during those occasions and intend to purchase tickets before their journey find the air ticket price high. Usually during Eid there is a pressure of passengers on one side, when the fare is calculated, the fare is determined keeping in mind the operation cost.
While the airlines carry about 80 percent passengers throughout the year, they carry an average of 65 to 70 percent passengers to various destinations during Eid. The reason is that the average passenger is less due to one way pressure of passengers.
Inequality in the cost of operating airlines and income is making it difficult for private airlines in Bangladesh to survive in the aviation industry. The authorities concerned should take a strict look at the cost sectors so that they do not unnecessarily affect the aviation business.
The writer is the General Manager (Public Relation) of
US- Bangla Airlines
