Third terminal talks collapse as CAAB, Japan consortium fail to resolve revenue dispute

Infographics: TBS

Negotiations between the Civil Aviation Authority of Bangladesh (CAAB) and the Japanese consortium selected to operate Dhaka airport's Tk21,000 crore third terminal have stalled once again, with both sides failing to bridge key differences after multiple rounds of talks.

People directly involved in the process told The Business Standard that the latest two-day negotiation on 24-25 November ended without progress, as disagreements over revenue sharing and the income-expenditure model remain unresolved.

Consortium representatives said CAAB is unwilling to share revenue from major income streams and is instead pushing for "an India-style income-expenditure model that is incompatible with the consortium's international-standard proposal."

The terminal, soft-launched in October 2023, was originally scheduled for full operation by December 2024. Delays in equipment imports, frequent leadership changes, and political transitions have already pushed that deadline to December 2025, and CAAB now says it cannot commit to any firm date.

Int'l tender is back on the table

With negotiations stalled, officials say the government may now consider floating an international tender for a new operator. Any prolonged delay risks taxpayers having to start servicing the Tk15,000 crore JICA loan for a terminal that remains largely idle.

"We have officially informed the civil aviation ministry and PPP Authority about the situation," CAAB spokesperson Muhammad Kawsar Mahmud told TBS.

A senior CAAB official, requesting anonymity, said: "The core hurdle is financial alignment. We submitted all documents for review, and the consortium sent formal feedback on 2 December. But their proposal is not feasible for us."

He added that the final decision now rests with the civil aviation ministry and the PPP Authority — and an open international tender is a realistic possibility.

The Japanese consortium was chosen by the previous government, likely linked to Japan's financing of the project. Since the change in government in August 2024, both sides have struggled to reach a consensus on revenue, costs, and operational oversight.

PPP Authority CEO Chowdhury Ashik Mahmud Bin Harun confirmed that discussions are ongoing but inconclusive.

After the November negotiations, a consortium official told TBS: "We have not reached anything substantial yet." The consortium has not responded to calls, messages, or emails since submitting its feedback to CAAB on 2 December.

CAAB officials acknowledge the terminal is unlikely to become fully operational within the interim government's tenure. Even after an operator is appointed, at least six months of preparation will be required.

Concerns are rising as warranties on imported equipment—including critical systems — have already expired or are close to expiring, increasing financial losses.

Civil Aviation Adviser Sk Bashir Uddin and Secretary Nasreen Jahan did not respond to repeated calls or texts seeking comment on next steps.

Before the final negotiation round in September, Adviser Bashir Uddin said the government was prepared to seek alternative international operators if the consortium could not agree to terms. However, after meeting him on 12 November, Japanese Ambassador Saida Shinichi said the consortium remained keen to operate and maintain the terminal.

The consortium comprises Japan Airport Terminal Company, Sumitomo, Nippon Koei and Narita International Airport Corporation. Under its proposal, Biman Bangladesh Airlines would handle ground services for two years under consortium supervision, while CAAB would retain responsibility for data security.

What CAAB and the consortium say

CAAB officials admit that revenue sharing is the main sticking point and that the consortium fears the project may become financially unviable under the government's framework.

Consortium sources say CAAB is reluctant to share earnings from two of the airport's most profitable revenue streams—the passenger safety fee and the airport development fee. Since August 2020, passengers have been paying both fees for domestic, regional, and international flights.

"These fees are essential. Without them, operating expenses cannot be balanced through secondary income sources like ground handling royalties or commercial space," a consortium representative said.

He said the proposed business model aims to maintain international standards. "CAAB's consultant analysed revenue and expenses based on Indian benchmarks. But the third terminal's advanced, future-focused infrastructure means costs cannot be balanced using regional norms."

Consequences of further delay

A CAAB official confirmed that warranties on expensive imported equipment have expired or are close to expiring, prompting urgency to begin partial operations to limit losses.

Built with Japanese assistance, the Tk21,000 crore terminal—financed with Tk15,000 crore from JICA and the rest from the Bangladesh government—was designed to serve 24 million passengers annually.

Aviation analyst and former Biman board member Kazi Wahidul Alam said the failure to appoint an operator on time has left the entire project at risk.

"The warranties are expiring, risks are rising, and loan repayment begins within a year—yet there is no revenue. Nowhere in the world does a massive installation sit idle like this," he said.

He also questioned the operator-selection process: "It's unclear whether the government wants an open tender or a limited invitation. Previously, dependence on the Japanese consortium meant alternatives were not considered. Now that same consortium is imposing conditions, exploiting the authorities' lack of preparedness."

A long-delayed journey to full operation

On 4 August, a Biman Bangladesh Airlines flight became the first to use the terminal's Boarding Bridge and Visual Docking Guidance System, marking a step toward readiness.

Trial runs, including boarding bridge tests, are ongoing. Full operation will require around 6,000 personnel, including 4,000 security staff.

Once operational, the terminal will triple the airport's annual passenger capacity and double cargo handling capacity. The facility includes 26 boarding bridges, a fully automated baggage system, and enhanced passenger amenities.