Plagued by corruption and a litany of other issues, Biman finds it hard to keep up with the competition
Mamun Abdullah, Dhaka: Bangladesh’s national flag carrier Biman Bangladesh Airlines started operations with a single aircraft in 1972. It gradually spread its wings to cover 26 international destinations in 2006 with only 10 planes.
But rather than expanding, the number of international destinations has come down to 18 in the last 16 years.
With the government pumping money into Biman, the airline has seen the size of its fleet grow. But services provided by the airline leave much to be desired for lack of a proper business policy.
Government officials and experts attribute inefficient management as well as corruption and irregularities to Biman’s sorry state of affairs.
They say despite being in the business for 50 years, a multitude of issues still plague Biman, including ticketing mismanagement, poor passenger service, lack of flight schedule and fleet planning, and inefficient human resource management.
Allegations of corruption against Biman officials, including the top brass, are nothing new. Take for example Biman’s former managing director and chief executive AM Mosaddique Ahmed, who was relieved of his duties due to complaints of irregularities in the appointment of pilots along with allegations of a lack of transparency.
The authorities also found that former chairperson of Biman’s Board of Directors Air Marshal (retd) Jamal Uddin Ahmed and former Biman MD and CEO Mosaddique Ahmed had been involved in signing a non-transparent agreement with Egyptair, the state-owned flag carrier of Egypt, in 2014 for leasing two Boeing 777-200ERs for five years.
The lease was against the national interest as Biman had to pay Tk10 crore to Egyptair per month for each aircraft even if they were not in service according to the deal. The aircraft remained out of service for a long time owing to engine issues that had soon become apparent.
The parliamentary standing committee on the Ministry of Civil Aviation and Tourism in March 2019, after a probe, said a section of Biman officials had signed the deal for personal gains and that the terms and conditions of the lease agreement clearly went against Biman’s interests.
The commission also reported in 2020 that some Biman officials were involved in corruption and irregularities in the airline’s revenue collection process, adding that the Biman authorities had found evidence proving the allegations but had not taken any countermeasures.
These kinds of irregularities keep hampering the growth of the state-owned air carrier, resulting in huge losses in the process.
Transparency International Bangladesh (TIB) Executive Director Dr Iftekharuzzaman said research articles on irregularities and corruption in the aviation sector of Bangladesh had been published at different times.
Biman needed to put an end to corruption and hand out exemplary punishment to its dishonest employees to get back on track, he said.
Profit versus loss
In the last 10 years, the national flag carrier lost over Tk1,500 crore despite lowering the number of routes, raising ticket prices, terminating employees, and cutting their salaries.
According to a Biman’s Finance Directorate report, over the same period, the airline accumulated a debt of Tk1,400 crore while making a profit of only Tk1,000.
However, the report also shows that the airliner was a profitable company between the 1991-92 fiscal year and the 2003-2004 fiscal year.
Over the past 15 years, Biman incurred its biggest loss of Tk594 crore in FY12 while it counted profits in FY09.
The airline had incurred losses worth Tk1,182 crore from 1972 to 2007 while it lost around Tk1,250 crore between 2009 and 2014.
Interestingly, Biman made profits in 2007 and 2008 under the military-backed caretaker government.
The airlines also made a profit for three years between 2015 and 2017.
It dipped into losses again in the 2017-18 fiscal year, made a profit of Tk272 crore in FY2018-19, counted the net loss of around Tk81 crore in FY20, and once again made a profit of Tk158 crore in FY21.
The number of passengers declined significantly since the beginning of the pandemic.
The number of passengers in FY19, FY20, and FY21 (upto April) approximately was 2.7 million, 2.04 million and 823,000, respectively.
Biman MD and CEO Abu Saleh Mostafa Kamal pointed out that lack of cash capital, shortage of aircraft, inadequate technical ability, fuel price increase, and absence of realistic long-term planning have often come in the way of the desired progress.
Mentioning that the airline has been failing to make full use of its fleet due to Covid-19 he said he expected that profits would increase if restrictions were relaxed.
Near-monopoly blown away by competition
Biman was turned into a public limited company in 2007 by the then military-backed caretaker government in a bid to make it profitable.
However, Biman becoming a profitable entity is still a far cry as its market policies have never been competitive and passenger-friendly.
Biman enjoyed a near-monopoly in its first 25 years of business, but it later became a concern due to its poor management and corrupt practices after the market had been opened to other airlines, said experts.
Policies made by “unskilled, dishonest and incompetent” officials of Biman were not business-friendly, aviation expert ATM Nazrul Islam told the reporter.
Its staff had yet to develop a “commercial attitude” due to having a monopoly for a long period, he said.
When private airlines entered the market, resulting in fierce competition, Biman fell behind and is still not able to keep pace in the domestic as well as international markets.
The airline has been controlling ground handling exclusively since its inception but has not been able to take advantage of it because of mismanagement.
Islam said Biman would become more accountable and profitable if it entered the capital market.
“Biman has a lot of resources now. If it enters the share market, people can become its shareholders and it will also create a big market for Biman. The government will reap more benefits as well,” he added.
Kazi Wahidul Alam, a former Biman board member, said the national carrier should redesign its strategy by focusing on routes, the Covid-19 pandemic situation, client demands and, above all, improving management, become a commercial success.
He also said government interference, “inefficient” management and unions had to be put to an end for turning Biman into a profit-making organization.
Biman had been unable to recruit even 50 skilled people in its 50 years of business, he said. “The biggest tragedy is that Biman’s market share has fallen below 50%,” he added.
“The government should consider operating Biman by an efficient, capable and experienced private sector organization that has experience in aviation,” said the expert.
It is difficult to turn a profit if an organization is run only by bureaucrats, unaccompanied by management experts, he added.
Industry insiders also pointed out that Biman’s Board of Directors and managing directors were made up of people with low-skilled military or civilian backgrounds. They are later replaced as they become skilled, which is another reason for Biman’s not making big returns.
Acknowledging the lack of skilled manpower, Biman MD and CEO Abu Saleh Mostafa Kamal said: “We are facing a number of challenges, including unequal competition with major airlines, lack of coordination and capacity building with global aviation business, rising jet fuel prices and lack of capital.”
