Airlines of Bangladesh in turmoil due to COVID-19

- A Monitor Desk Report 07 Apr, 2020 | 1664 Views|-+
Dhaka: One of the most affected sectors due to the coronavirus outbreak is the airlines industry of Bangladesh.

The air connectivity between Bangladesh and outside world has drastically reduced over time amid the COVID-19 pandemic with withdrawal of fights by operating foreign airlines and closure of routes connecting Bangladesh by a number of countries.

Meanwhile, the Civil Aviation Authority of Bangladesh (CAAB) has suspended all schedule international flights to and from Bangladesh from 0001 BST on April 8 to 2359 on April 14. This will mean almost total halt of air operation to and from Bangladesh.

In a circular, the CAAB said that the action has been taken “considering the persistent risk and to avoid expansion of pandemic COVID-19 throughout the country”. It said, all scheduled international commercial passenger flights from Bahrain, Bhutan, Hong Kong, India, Kuwait, Malaysia, Maldives, Oman, Saudi Arabia, Sri Lanka, Singapore, Thailand, Turkey, UAE, and UK “shall not be allowed to land at any international airports of Bangladesh”.

At the moment, except Dhaka-Guangzhou route of US-Bangla Airlines all international air routes are closed, though temporarily. Flights on all domestic routes are also laying suspended.

Situation in all the four airlines of the country — state owned Biman Bangladesh Airlines and private — Regent Airways, NOVOAIR and US-Bangla Airlines — are similar and with closure of flight, one after another, most of the aircraft are now laying grounded.

No income, huge expenditure

With drastic reduction of operation for quite some times now, the revenue income of all the airlines nose-dived.

While sources of revenue earning have dried for these airlines, some fixed expenditures such as civil aviation charges, maintenance of aircraft, salary of employees have become heavy burden for these airlines.

According to concerned sources, there are a total of 44 aircraft belonging to these four airlines — Biman - 18, US-Bangla - 13, NOVOAIR - 7 and Regent Airways - 6. Almost all these aircraft are now grounded as there is no operation.

Mukabbir Hossain, Managing Director and CEO of Biman Bangladesh Airlines said with no flight, there is no income or revenue. But Biman is to maintain the grounded aircraft and 17 overseas offices in addition to head-quarter and domestic offices. The situation resulted in loss of BDT 400 crore in January, February and March months.

Abdullah Al Mamun, Managing Director of largest private carrier US-Bangla Airlines said as of late March, the airline has incurred a loss of BDT 250 crore. “In past eight months, we have expanded our fleet with six brand new aircraft. But coronavirus has crippled us. Last hope — the domestic operation has also topped."

While there is no operation, bank installments, cost of aircraft maintenance, various taxes and civil aviation charges, overseas offices and salaries of employments are putting huge pressure on private airlines, Mamun added. He demanded declaration of “rescue package” by the government.

Govt support

It is learnt that Secretary General of Aviation Operators Association of Bangladesh (AOAB) and Managing Director of NOVOAIR Mofizur Rahman informed that to ride over the present crisis AOAB has submitted a proposal to Ministry of Civil Aviation and Tourism demanding withdraw of civil aviation charges, advance tax of import of spare parts and tax on fuel. He also demanded interest free deferred payment for some part of bank loans.

IATA appeal

The International Air Transport Association (IATA) is urging Asia-Pacific states to take urgent action to provide financial support to their airline industry impacted by the COVID-19 crisis.

“Based on a scenario in which severe travel restrictions last for three months, the Asia-Pacific region as a whole will see passenger demand reduced by 37 per cent this year, with a revenue loss of USD 88 billion. While each country will see varying impact on passenger demand, the net result is the same – their airlines are fighting for survival, they are facing a liquidity crisis, and they will need financial relief urgently to sustain their businesses through this volatile situation,” said Conrad Clifford, Regional Vice President, Asia-Pacific, IATA.

In its latest analysis, IATA expects airlines to post a net loss of USD 39 billion during the second quarter ending June 30, 2020. The impact of that on cash burn will be amplified by a USD 35 billion liability for potential ticket refunds. Without relief, the industry’s cash position could deteriorate by US$61 billion in the second quarter

BD govt action

Senior Secretary of Ministry of Civil Aviation and Tourism Muhibul Haque recently told media that the ministry is collecting demands from the affected airlines. Decision will be taken following discussions between government and concerned parties.

Meanwhile, Prime Minister Sheikh Hasina’s announcement on April 5 has generated hope that country’s airline industry may get rescue financial support. However, the natural and size of support is not clear at this stage.

Prime Minister Sheikh Hasina unveiled the government work plan to overcome the possible COVID-19 impact on the country’s economy, declaring an allocation of BDT 72,750 crore under a set of stimulus packages.

In a nationwide televised address, she said “I hope our economy will rebound and we could reach near the desired economic growth, if the stimulus packages, the previous and the fresh ones, could be quickly implemented”.

The Prime Minister said that, "The sectors and areas which are being affected are: industries production, export trade, services sectors, especially tourism, aviation, and hospitality sector, small and medium enterprises and employments and these are experiencing a landslide fall."

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