Govt raises jet fuel price as foreign airlines drain supplies
This surge in fuel uptake prompted the government to reconsider its pricing policy
Highlights:
- Gov raises jet fuel price by 80%
- Foreign carriers exploit Bangladesh's previously lower fuel prices to uplift large volumes
- Fuel crisis persists amid global supply constraints
- Aviation operators warn of financial strain on domestic airlines
The government has significantly increased jet fuel price after observing that foreign airlines were uplifting disproportionately large volumes of fuel from Bangladesh compared to previous levels.
A senior official from the Energy Division, on condition of anonymity, told TBS that foreign carriers have recently been taking advantage of comparatively lower fuel prices in Bangladesh.
"For instance, an aircraft from Azerbaijan that previously refuelled around 10,000 litres from Hazrat Shahjalal International Airport in Dhaka collected as much as 80,000 litres ahead of Eid. Similar trends have been observed among other international airlines," he explained.
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This surge in fuel uptake prompted the government to reconsider its pricing policy, said the official.
He further said, "Although global fuel prices have increased due to the ongoing war involving Iran, the United States and Israel, the government had initially refrained from raising domestic fuel prices.
"Prime Minister Tarique Rahman was also reportedly opposed to any price hike at the outset."
However, during a meeting on 19 March regarding the fuel supply situation, officials highlighted the growing tendency of foreign airlines to source excessive fuel from Bangladesh due to the price gap. Following this, the prime minister agreed to revise the rates.
Subsequently, the government raised the price of jet fuel for domestic flights to Tk202.29 per litre, up from Tk112.41. For international flights, the price was increased from $0.7384 to $1.3216 per litre.
Industry insiders noted that Middle Eastern countries collectively export around 1.10 million barrels of jet fuel daily, accounting for around 17% of global demand. Disruptions caused by the war have significantly constrained supply, pushing up prices worldwide.
As a result, several countries have already taken similar measures. The US has nearly doubled jet fuel prices, while Vietnam and Myanmar have reduced domestic flight operations.
The Philippines is reportedly considering suspending some domestic routes, and India has withdrawn caps on international airfares in response to rising fuel costs.
Meanwhile, the decision, which represents around an 80% increase, has drawn criticism from industry stakeholders. The Aviation Operators Association of Bangladesh described the hike as "unreasonable" and urged the government to reconsider.
The organisation warned that such a sharp increase could place severe financial strain on local airlines, potentially leading to higher airfares for passengers and even the suspension of some domestic routes.
