Will a fleet of new aircraft alone help Biman improve its service?

Since US plane maker Boeing accounts for 18 of Biman's 21-strong passenger fleet, it is natural for their European rival Airbus to smile over a deal with Bangladesh for aircraft purchase. But the deal signed in London on 5 May was a reason for worries for Boeing despite its strong presence in Bangladesh. Earlier, the board of Biman Bangladesh Airlines had taken a policy decision to purchase two wide-bodied A350 freighters in response to the proposal from Airbus.

Aircraft purchase is a multi-million-dollar business and any such deal at state level that may run into billions is definitely a big one for either of the two aviation giants.

So, Boeing's regional top executive flew in to Dhaka in less than a week since Prime Minister's Private Industry and Investment Adviser Salman F Rahman announced the signing of an aviation cooperation deal with Airbus. In a press conference on 10 May here, David Schulte, Boeing's managing director (commercial marketing) for Asia Pacific and India, offered an easy solution that Biman should stay with the American company to keep its overall expenses in check. In his view, composition of planes from two different manufacturers will inflate overall fleet maintenance costs and make the management complex for Biman.

No immediate reaction to the Boeing executive's opinion was learnt from Biman. But a former managing director of Biman, Md Abdul Momen, who was the man behind the state-owned carrier's landmark deal with Boeing back in 2008, says Biman must have done the cost-benefit analysis and found it viable to have Airbus aircraft included in its fleet along with Boeing planes. Though having aircraft from different manufacturers requires different sets of technical arrangements, expertise and manpower involving additional cost for a smaller fleet, an airline can go for a mix of aircraft from different companies if it finds it commercially viable, he feels.

"Here Biman knows well how the Airbus deal will benefit them," Momen adds.

As per the 2008 deal signed with Boeing, aircraft were purchased directly from the company, there was none in-between, which matters a lot in aviation purchase, he recalls.

Biman has no dedicated cargo plane and air freight business from Bangladesh is almost entirely in the hands of foreign airlines. The national carrier sees a business opportunity in air cargo, which prompted them to accept Airbus's offer of the A350 freighters, Biman's managing director Shafiul Azim told The Business Standard earlier this month after the state-owned carrier's board meeting.

Salman F Rahman also thinks Biman needs more aircraft, both for passenger and cargo services. In an interview during his recent visit to London, the prime minister's private industry and investment adviser has said the Airbus deal was signed to address the current aircraft shortage of Biman which looks to expand its wings to America, Europe and the Middle East further with cargo and passenger flights.

Under the aviation cooperation deal, he said, Airbus will also establish an aviation university in Bangladesh.

Aviation insiders agree that there is a market in cargo business as demand even surpassed the pre-pandemic level globally, but they question whether the cargo space available in Biman's passenger flights is used fully. A similar question also is relevant for the carrier if it can utilise its passenger seat capacity in full.

"Will Biman be able to manage enough cargo both for inbound and outbound flights?" asked one of them, requesting not to be named.

Illustration: TBS

A senior pilot, who stressed that Biman needs to have wide-bodied aircraft to grab a slice of the annual cargo market pie equal to 2.15 lakh tonnes now being handled almost solely by 14 foreign airlines, is sceptical about the national carrier's marketing skill. The cargo holds of Biman's passenger flights cannot be filled fully, while foreign carriers are doing pretty good business, he pointed out.

The latest deal marks Biman's return to the European aviation giant Airbus after nearly three decades since its purchase of two new Airbus 310-300 in 1996.

But it does not indicate an end to Boeing's business as well. In November 2019, Biman and Boeing signed for two 787 Dreamliners valued at $585 million during the Dubai Airshow.

In fact, Biman has been in close ties with Boeing since 2008, when it signed its adventurous $1.2b deal with the manufacturer to purchase eight new planes-- four 777-300 ER and four 787-8 models. It was the first such deal for Biman to buy aircraft directly from the manufacturer.

The Boeing deal was seen as a big boost for Biman.

Mahbub Jamil, a private sector personality who was then special assistant for civil aviation and tourism to the chief adviser to the then caretaker government, had termed the deal as "revolutionary" which would pave the way for more such purchases in future.

As per the deal, US-based Exim Bank provided 85% of the amount as loan at 6% interest, while a consortium of local banks funded the rest. Biman was to repay the loan in 12 years.

The first Boeing 777-300ER of the deal was delivered in November 2011 and the rest of the planes joined the Biman's fleet in phases till 2019.

Biman acquired three Dash-8 planes in 2020 and 2021 under government to government deals between Bangladesh and Canada.

The latest deal with Airbus will push Biman one step forward in its venture to modernise its fleet and diversify its reach.

But will adding new aeroplanes from global giants to its fleet alone help Biman make a mark in the global aviation landscape? Is aircraft shortage the only shortcoming for the carrier?

Apart from passengers' complaints about overall service quality – from ticket booking to inflight hospitality to baggage handling, allegations of corruption in accounts and recruitment against top management people are also rampant. Some allegations have been proved in internal investigations, but remedies are rare.

"If these issues do not change, new aeroplanes alone cannot help much. It is not the plough itself, it is the man behind the plough that matters," said Momen, the former Biman MD.

"Biman is not a charity. It's a commercial entity and it must run commercially," he said.

The national carrier went through a massive restructure during the 2007-08 period, when a caretaker government was in state power.

In July 2007, the national flag carrier turned into a public limited company under the Companies Act 1994 and its official name changed to Biman Bangladesh Airlines Ltd from Bangladesh Biman Corporation.

It was supposed to offload shares in the stock market. Some 1,500 employees of the airline were offered voluntary retirement to cut surplus workforce as part of the restructuring plan taken after Biman posted a $120 million loss in 2006 only.

But the process has fizzled out.

For 16 years since then, Biman is still running as a fully government entity.

In March this year, Prime Minister Sheikh Hasina announced her government's vision to make Bangladesh an aviation hub in the region. She referred to the measures and projects taken during the last one decade to upgrade airports, airport security and ground handling.

Being the country's biggest airline, Biman needs to make best use of these facilities and improve its service quality at competitive costs, which it could not offer even for Hajj flights despite demand. Biman's fare is not at par with its service to its passengers compared to its global, mainly the Middle Eastern destinations for most Bangladeshis expat workers.

From a modest beginning in 1972 with just a Douglas DC-3 aircraft and two Fokker F-27s, Biman has travelled a long way. It is now equipped with a fleet of new generation aircraft that many of its peers may envy.

With all policy and financial support from the government, the national carrier now needs to deliver as expected. Otherwise, foreign airlines will continue to syphon away its potential business. Aviation is a service and it is a business, which has to live and grow on its own, without relying solely on the government's aid for everything, forever.