What will Biman do with so many aircraft?

A Biman aircraft moves along the runway at Dhaka airport. Photo: TBS

I was associated with Biman's procurement of various aircrafts-from ATP to Airbus to Boeing along with finding a strategic partner for Biman. All these gave me a good understanding of how Biman runs and more importantly where the shoe pinches. I was also attached to the aircraft financing team at ANZ and Citibank as well as the airlines optimisation process with my PwC colleagues.

I think there is a simple question Bangladesh needs to answer before Biman Bangladesh Airlines commits to another major aircraft purchase: what will they do with so many aircraft?

Biman currently operates only 19 aircraft. Yet it could soon have orders for another 21—11 Boeing jets and 10 Airbus aircraft—in addition to the 14 Boeing aircraft it agreed to purchase in April for around $3.7 billion. If all these orders go ahead, the national flag carrier would have 35 aircraft on order against a fleet of 19 today. This would be the biggest expansion in Biman's history.

Expansion, by itself, is not a bad thing. Bangladesh has millions of expatriate workers, a growing middle class and rising demand for international travel. A modern fleet could help Biman serve more destinations, improve reliability and capture passengers who currently fly foreign carriers.

But buying aircraft is one thing; making money from them is another.

An aircraft becomes an economic asset only when it is used productively. Each additional plane requires pilots and cabin crew, engineers, maintenance facilities, spare parts, training, insurance, airport slots and, most importantly, enough passengers and cargo to generate sustainable revenue. If an aircraft spends too much time on the ground, it does not become cheaper because it is new. It becomes an expensive idle asset.

This is why Biman needs to explain its fleet strategy before expanding it further. Which routes will these aircraft serve? What passenger and cargo demand has been projected? How many hours will each aircraft fly? When will existing aircraft be retired? What will be the impact on fuel, maintenance, staffing and financing costs?

The Airbus proposal raises another legitimate commercial question. Biman's current jet fleet is entirely Boeing. Introducing Airbus aircraft is not necessarily wrong. Many successful airlines operate mixed fleets. But for a relatively small state-owned carrier, the benefits of fleet diversification must be weighed against additional training, maintenance, spare-parts and operational complexity. The decision should therefore be based on economics, not symbolism.

There is also a significant timing issue. Biman says it faces an aircraft shortage, yet deliveries from the April Boeing agreement are scheduled to begin only in 2031 and continue until 2035. Aircraft ordered today cannot solve a capacity problem that exists today. If Biman genuinely needs additional capacity in the short term, the government should explain whether leasing, short-term purchases or better utilisation of the existing fleet can bridge the gap.

Then comes the question taxpayers will ultimately care about most: how much will all this cost?

The value and financing arrangements for the additional proposed aircraft have not yet been fully disclosed. That should happen before commitments are made. Whether the planes are financed through commercial borrowing, leasing or other arrangements, Biman's financial performance will determine whether those obligations can be serviced. If they cannot, the burden can ultimately fall on the public.

Each additional plane requires pilots and cabin crew, engineers, maintenance facilities, spare parts, training, insurance, airport slots and, most importantly, enough passengers and cargo to generate sustainable revenue. If an aircraft spends too much time on the ground, it does not become cheaper because it is new. It becomes an expensive idle asset.

The manner in which some of these deals have emerged also makes transparency essential. The US special envoy announced the additional Boeing commitment publicly before the details were formally communicated by Biman. European representatives have subsequently stressed the importance of commercial merit in aircraft procurement. 

None of this, by itself, proves that procurement decisions are being driven by political considerations. But it does make a transparent, competitive and independently assessed process all the more necessary.

Bangladesh may (India doesn't have one) need a stronger national airline. But national pride cannot substitute for a business case.

Before signing more contracts, Biman should publish one integrated fleet and business plan covering routes, demand, utilisation, financing, operating costs, staffing, maintenance and retirement schedules. The assumptions should be independently reviewed and made public.

The real measure of Biman's success will not be how many aircraft it owns or orders, but whether those aircraft fly enough, earn enough and serve passengers efficiently enough to justify the investment.

Before we ask how many aircraft Biman should buy, we should ask a more fundamental question: how many aircraft can Biman profitably operate?

Mamun Rashid is an economic analyst.