Biman’s frustrating legacy of misadventures
In the country's aviation landscape, Biman Bangladesh Airlines and controversy have now become synonymous. From rampant corruption in every layer of its activities to gross misgovernance permeating all levels of decision-making—with ample evidence presented in various investigative reports—Biman is fully submerged in a stinky cesspool of controversies of various forms, scales and scopes.
Biman's recent decision to proceed with procuring Airbus aircraft, with the a reconstituted evaluation committee turning projected losses into projected profits based on illogical assumptions, has added more flesh to the body of accusations against the national flag carrier over mismanaged deals.
For all latest news, follow The Daily Star's Google News channel. One would remember the 2014 lease of two EgyptAir aircraft for five years, which Biman could only put into use initially for one year, due to engine defects. Not only did it have to take separate engines on lease for Tk 177 crore, it also had to count staggering losses due to keeping them sitting idle. Between 2014 and 2019, Biman had to bear a loss of Tk 1,200 crore, with the expenditure of Tk 3,529 crore surpassing the Tk 2,329 crore revenue that the two aircraft had earned.
It seems Biman is about to make another loss-making venture by procuring the Airbus aeroplanes, as the projected profits are based on unrealistic assumptions, as stated earlier. First of all, to show a 20 percent jump in revenue, the 92 percent passenger cabin factor that Biman projected for these aircraft is inflated. On an average, the passenger load factor or passenger cabin factor of an aircraft is usually around 70 percent, depending on various factors, such as expenditure. Last year, the global passenger load factor was 81 percent.
The second fallacy in Biman's logic for profit is the route suggestion. While the national carrier says that the Airbus aircraft would be profitable in two routes only—the Dhaka-New York route, three times a week, with a stopover in Istanbul; and the Dhaka-Jeddah route with daily flights—Biman has apprently lost sight of the fact that it is not authorised by the US Federal Aviation Authority to fly in the NY route due to the Civil Aviation Authority of Bangladesh's operational irregularities identified in 2006.
Moreover, setting up an Airbus fleet would require Biman to create a completely separate and new supply chain, and logistics arrangement with trained manpower, as the current one caters to a predominantly Boeing fleet. This would involve crores in additional costs.
It has been suggested that this is more of a diplomatic move by the Bangladesh government, which is trying to move away from its dependence on US-made aircraft. Airbus is European-made: France, Germany, the UK and Spain are all involved in its manufacturing value chain, with the final parts assembled in Toulouse, France.
Whatever the reason may be, Biman cannot and should not be used for any other purpose other than ensuring its healthy and sustainable growth and creating a competitive edge for the country's aviation industry in the global marketplace. Biman is not a tool for diplomacy that can be used at the government's whim.
At a time, when the global airliners are rebounding from the economic shock caused by the Covid pandemic, braving headwinds, riding on the back of the booming aviation sector growth (according to the International Air Transport Association (IATA), air travel continued to bounce back in 2023, matching pre-pandemic levels) Biman keeps counting losses. Even in FY2022-23, the company chewed on a loss of Tk 25.91 crore in its main airline business.
A Prothom Alo report further reveals that Biman owes the "civil aviation authority huge sums of money for landing charges, boarding charges, leasing, surcharge as well as VAT and taxes on other charges." What is worrying is that it window-dressed its books to hide the losses. According to the same report, the liabilities were not shown on the past five years' financial statements, which also did not include a significant amount that Biman owes to Padma Oil Company in interest due to delayed payments. These were revealed in audit reports, and is unfortunately not a new phenomenon for Biman. Such findings have even been discussed in parliament, without making any meaningful impact on Biman or its operations. It continues to go wayward.
That Biman is a highly corrupt institution that thrives on shameless plundering of public money is no secret. It is mired in mismanagement and lacks good governance. While the officials draw hefty salaries and enjoy additional perks, their performance is mediocre at best. Even recently, Biman gave all its employees and staff members a five percent "special incentive," including for its retired officials and casual workers. Its losses are staggering, and on top of that the new expenses are expected to take a heavy toll on its books.
It is high time the government took immediate and stringent measures to address the matter of Biman's mismanagement and complete lack of accountability. The measures should ideally include a complete system overhaul, and the implementation of a well-planned Business Process Reengineering strategy to trim the fat, plug the gaps, and streamline the processes. Most importantly, Biman should be brought under a clearly defined governance framework with updated code of conduct, policies, and SOPs to ensure good governance practices. And the authorities must ensure that these policies, SOPs and code of conduct are implemented and applied to the dot.
This all depends on the intent and political will of the authorities. Do they have the willingness to introduce meaningful changes to how Biman operates, to transform it into a growing, profitable venture?
Tasneem Tayeb is a columnist for The Daily Star. Her X handle is @tasneem_tayeb.
Views expressed in this article are the author's own.
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