CAAB to issue permit, oversee business

Appointment of GSA is now a must for foreign airlines in BD

- By Raquib Siddiqi 01 Jul, 2018  |    -      +
Dhaka : Under a new law, the Civil Aviation Autho-rity of Bangladesh (CAAB) has made appointment of local General Sales Agent (GSA) mandatory for all foreign airlines operating to Bangladesh. The CAAB also assumed responsibility of issuing permit and overseeing entire GSA operations.

In the context of functionality, GSAs do job for the airlines - both passenger and cargo - and should be responsible to airlines, not CAAB. Until now GSAs needed only 'no objection certificate' from CAAB to run their business.

But now everything has changed. A casual look at the provisions, contained in a recent CAAB circular will show the extent of the regulatory body's involvement in the affairs of GSA business. In addition to issuing permit, the CAAB has gone out of the way to fix the size of financial involvement, size of office space, size of manpower, etc. as well as surveillance of operation.

It is also strange that the CAAB is making GSA provide security in the form of bank guarantee to it, with authority to encash it, at the time of need.

In a recent circular on "Appointment of Sales Agent", issued on May 27, the CAAB said "If a foreign air operator desires to provide civil aviation services in Bangladesh, it shall require to appoint, as its sales agent, an entity which is registered in Bangladesh and is hundred per cent owned by a Bangladeshi citizen".

The CAAB, through a circular, has requested all foreign air operators, operating schedule flights to and from Bangladesh, to appoint their sales agent within six months. "No GSA shall start operating as GSA of a particular foreign air operator unless issued with the permit from the CAAB under the purview of this circular," it said.

According to the circular, holder of a permit issued by CAAB for GSA arrangements, facilities and or services shall comply with the requirements, published in the circular and hereby instructed to forward to the CAAB a "Declaration of Conformance" which indicates the degree of compliance with each item detailed in this document.

Administrative, financial or any other surveillance whatsoever required shall be carried out by Civil Aviation Authority of Bangladesh to the facilities of permit holders for its services, arrangements and operations during issuance and renewal of permit of the prospective GSA.

The CAAB has divided GSA into two categories. Category-A: For passenger and or cargo airlines (online GSA) and Category-B: For passenger and of cargo airlines (offline GSA). The intended GSA must have a minimum financial strength in a form of paid up capital/liquid assets as follows: For category-A: BDT. 500,00, 000 and for category-B: BDT. 150,00,000.

The prospective GSA shall be a travel agent in accordance with the Travel Agency Regulation Act, 2013.

The CAAB circular also specified size of the GSA office and number of staff. It said: "The prospective GSA must contain an office of minimum 3000 sq.ft. and a minimum 20 number of employee whereas four employee/officer from accounting/ finance background, two employee/officers from management back ground and rest of them may be recruited as per the requirements of the prospect of business".

The permit shall be valid for a maximum period of 3 years with a provision for further renewal.

Each and every GSA permit holder shall be subjected to surveillance and the CAAB shall be authoritative to perform the periodical surveillance as and when basis by an officer, inspector or committee and submit a surveillance report.

The circular of CAAB said that a surveillance and evaluation committee shall be formed comprising of the following officials of the CAAB - (A) Director (deals with regulatory affairs), currently, DFSR - Head of surveillance and evaluation committee (HSEC), (B) two members from air transport (member), and (C) one representative from Legal cell (member).

Any contravention of the Civil Aviation Act, 2017, the rules made hereunder, regulations, ANO, circulars etc. through any activities of GSA or any representative of the GSA shall be treated as offence and consequently leading to enforcement action.

In case of national emergency or security or any other reason, CAAB shall have exclusive right to suspend, cancel/void the GSA permit without serving any notice.

About resolution of dispute, the Chairman, CAAB or any nominated officers or any other approved committee may take part to resolution of dispute and the method of the said dispute resolution will be mediation.

When venturing into a new or developing market or cutting costs in existing market, airlines choose a GSA as their representative in certain regions and locations, to offer their full set of services and products without investing in their own office and team.

The GSA may receive a commission up to maximum 3 per cent on all tickets and unit of cargo space sold in the region, that it represents.

Foreign airlines operating to and from Bangladesh could avoid investing in their own office and team, and instead, operation through appointed GSA is comparatively cost cutting cheaper option.

The argument that mandatory GSA system will help local travel organisation to earn up to 3 per cent in commission from the airlines is not so attractive. The fact is airlines managing its operation directly; benefit the country in different forms.

The new system of acquiring permit to operate as GSA will create double trouble for concerned travel agent. Under the law, to work as travel agent, the concerned organization must acquire permit from the Ministry of Civil Aviation and Tourism (MOCAT). And to work as GSA, all must be a travel agent.

Looking at Bangladesh aviation, will show that of around 23 operating foreign airlines, majority of leading ones like, Emirates, Qatar Airways, Etihad Airways, Saudi Arabian Airlines, Thai Airways International, Air India and Gulf Air managing their operation directly, albeit most of them started Bangladesh operation with GSA.

However, for various reasons, relations between the foreign airlines and GSAs did not go smooth with the passage of time, hence the Airlines decided to go on their own. Some of them had bitter experiences as well.

GSAs responsibility is only for the airlines - both passengers and cargo - and are responsible to concerned airlines only.

In fact, it is the airlines, which should dictate terms in regard to capability of prospective GSA. It is because of success and failure of GSA mean success and failure of airline concerned. CAAB has no role to play and has no stake in this regard.

The activities of GSA are purely commercial and related only to airlines. So, being regularity authority, why CAAB is venturing into controlling and supervising GSA activities, is not understood. It is specially when CAAB is under staffed to perform normal regulatory duties.

The provisions of the law will testify that CAAB intend to involve in all affairs of GSA operations, from issuance of permit to surveillance of operations and settlement of disputes.

Some of the provisions in the law are really strange. For example, CAAB is demanding bank guarantee from the GSA. There is no working relation between CAAB and GSAs, therefore it is not understood why CAAB should demand bank guarantee?

Moreover, how CAAB can perform this self-assumed responsibility in the absence of proper and required number of manpower.

The CAAB now has shortage of manpower to perform its regulatory function. With new organogram pending approval, the possibility of strengthening of manpower will be remote.

In such a situation, it is impossible to understand why CAAB is going to shoulder the avoidable responsibility of appointing and monitoring all activities of GSA?

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