Why break up Biman instead of privatising it completely?
With many national airlines worldwide transitioning into private hands, Bangladesh finds itself at a crossroads, struggling with an aging airline that has failed to meet commercial viability despite decades of operation
The Economic Strategy Realignment Taskforce has recommended dividing Biman into two entities, with one part managed by Biman and the other to be established as a new airline, tentatively named Bangladesh Airways, using half of its assets.
The proposal suggests that the newly formed airline should be independently managed by a world-class entity, targeting distinct markets and routes.
The inefficiencies of Biman Bangladesh Airlines and the global trend towards privatisation raise critical questions about the necessity of state ownership in the aviation industry.
With many national airlines worldwide transitioning into private hands, Bangladesh finds itself at a crossroads, struggling with an aging airline that has failed to meet commercial viability despite decades of operation.
Why split Biman?
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Biman has a history of prolonged inefficiencies and an inability to provide competitive services despite operating for five decades.
The government's economic strategy taskforce has proposed that half of its operations be handed over to a foreign airline — potentially Singapore Airlines or Qatar Airways — while the other half remain under local management.
"The proposal is seemingly a compromise between two extremes. One being letting Biman continue as is and trying to implement reforms within that structure. There have been attempts to do that before, but has yielded little result," said Dr Zahid Hussain, former lead economist at World Bank Dhaka office.
"The other extreme is completely privatising it. That is not politically easy. There are many issues. What will happen to the employees? Who will take care of the debts and liabilities? So there are financial issues, labour related issues. So, the current proposition is a sort of hybrid one," he added.
Bangladesh has never gone for a solution like this but neighbouring Sri Lanka has. In 1998, SriLankan Airlines entered into a partnership with Emirates, signing an agreement for a 10-year strategic partnership.
This agreement included exclusive rights for all aircraft ground handling and airline catering at Colombo-Bandaranaike airport for a decade. Emirates bought a 40% stake worth $70 million (which it later increased to 43.6%). The government retained a majority stake in the airline but gave full control to Emirates for investment and management decisions.
"The proposal is seemingly a compromise between two extremes. One being letting Biman continue as is and trying to implement reforms within that structure. There have been attempts to do that before, but has yielded little result. The other extreme is completely privatising it. That is not politically easy. There are many issues. What will happen to the employees? Who will take care of the debts and liabilities?"
However, after the Sri Lankan government took back control in 2008, mismanagement and financial losses returned. From 2008 to 2015, after the government took back control, the loss for the seven years amounted to $875 million.
The case of SriLankan Airlines underscores the importance of long-term commitment to privatisation rather than short-lived experiments that succumb to political pressures.
The idea behind Biman's restructuring plan is to create a real-time comparison between the two models to assess which is more viable.
"There are cases of governments operating multiple airlines, for example in Saudi Arabia. The new airlines can also be a subsidiary of Biman, with new management and funding. That airline will access the existing infrastructure of Biman and take engineering and hangar support from Biman," said aviation expert ATM Nazrul Islam.
However, the plan raises more questions. Would foreign management genuinely have the autonomy to make effective decisions, or would it remain subject to bureaucratic oversight? Would political interests allow a foreign entity to outperform a local counterpart without interference? Most importantly, if the newly created airline fails, what happens next?
The case for moving beyond a state-owned carrier
For years, Biman Bangladesh Airlines has suffered from financial mismanagement, political interference, and bureaucratic inefficiencies. Government-run airlines often struggle to compete with private competitors due to cumbersome administrative structures and the inability to make quick strategic decisions.
"The recommendation assumes that the government must have an airlines, a national flag carrier. However, if we cannot run it in a commercially viable manner, there is not much logic to the airlines continuing as a burden to taxpayers," said Dr Hussain.
Private airlines, by contrast, operate with leaner management, adopt customer-centric approaches, and remain focused on profitability. In Bangladesh, privately owned carriers such as US-Bangla Airlines and Novoair have steadily captured significant market share, demonstrating that the aviation sector does not necessarily require government intervention to thrive.
One of the biggest arguments for moving away from a national airline is financial sustainability. State-run airlines often rely on taxpayer money to remain operational, draining national resources that could otherwise be invested in infrastructure, healthcare, or education.
Many governments worldwide have found it increasingly difficult to justify pouring public funds into struggling carriers that continue to lose money. The US, for example, does not operate a national airline, yet it boasts a highly competitive and efficient aviation sector dominated by private companies.
Questions that loom
However, the notion of eliminating a national carrier is not without its challenges. Many countries view a national airline as an extension of their sovereignty, a flag-bearer that represents their presence on the global stage.
A government-run airline also allows the state to maintain control over key routes and ensure that critical international connections remain available, even if they are not immediately profitable.
Furthermore, the dissolution of Biman could lead to job losses, creating economic instability for thousands of employees who have dedicated their careers to the airline.
While private airlines have been successful, they do not have the same level of government oversight.
"There is no guarantee that private carriers will prioritise customer service, affordability, safety or even operational transparency. Private enterprises have profits as their ultimate goal, obviously they will focus more on that," said Former CAAB Chairman Air Vice Marshal Mahmud Hussain.
A foreign management might also find itself in unfamiliar waters, leading to not getting the expected results.
"It will be tricky for a foreign management to understand the ground realities associated with Bangladesh. And in the long term, it might also stunt our own capacity building," Mahmud Hussain added.
Experts also argue that just changing Biman's management might not yield the expected results as Biman deals with a lot of stakeholders, including the aviation ministry. Whether the new airline is given a free hand to operate remains to be seen.
"We need to work out the details. Who will be the partner? What is their record? What will be the nature of the contract signed with them? Most importantly, what happens when their time runs out. If it comes back to the same management, what reason do we have to believe the corruption won't return? We need to iron out these details," explained Dr Hussain.
