The rise of commercial airlines in Bangladesh

Over the past decade, the commercial airline industry in Bangladesh has demonstrated remarkable resilience and growth, with an annual expansion rate exceeding 8%, despite facing challenges such as the cessation of operations by some private carriers.

Key indicators are pointing towards a promising future, including projections that the number of air travellers will double by 2031. In response, airlines in Bangladesh are pursuing fleet expansion and increasing flight frequencies. However, private airlines are advocating for more business-friendly regulatory frameworks and policies to enable them to compete effectively with foreign carriers in the burgeoning aviation market.

Biman Bangladesh Airlines, the national carrier, is the major player in the Bangladeshi aviation landscape. In just three years, from 2019 to 2021, Biman Bangladesh Airlines doubled its seat capacity to a total of 4,698 seats. Furthermore, the airline plans to add 10 more widebody aircraft from Airbus to its existing fleet of 21.

US-Bangla, the largest private airline, has experienced a remarkable growth of over 800% in seat capacity within seven years, boasting more than 1,200 seats in total according to a 2021 study by The Institute of Chartered Accountants of Bangladesh. Another prominent private airline, NovoAir, has seen a 400% increase in seat capacity within the same seven-year timeframe, thanks to the phased acquisition of seven ATR aircraft.

The aviation industry in Bangladesh has been described as booming. Between 2013 and 2017, air travel saw a 22.1% increase internationally and a significant 64.7% increase domestically, as reported by the Civil Aviation Authority of Bangladesh (CAAB). This growth is attributed to the country's large population of 170 million, its projected economic development by 2026, and the portion of the population with sufficient disposable income to support air travel.

Notably, 80% of passenger and cargo transport is currently dominated by foreign carriers, highlighting the substantial potential for further growth in the Bangladesh air transport industry. Out of the 33 existing airlines, 12 foreign carriers have expressed interest in operating flights to and from Bangladesh, particularly following the partial inauguration of the much-anticipated third terminal at Hazrat Shahjalal International Airport, Dhaka. 

Squadron Leader Lutfor Rahman, CEO of US-Bangla Airlines, expresses optimism for the industry's future, emphasising that the positive trend and growth are evident. "Even a few years ago, you would have thought that the airlines in our country might close down. But after all, now we are growing." 

He stresses that various aspects, including infrastructure and human resource development, must be improved for sustained growth.

The aviation industry in Bangladesh has reached its golden jubilee since the establishment of Biman Bangladesh in 1972. Many airlines have come and gone during this time, with some suffering financial woes and ultimately closing down. 

However, private airlines like US-Bangla and NovoAir have defied the odds and demonstrated substantial growth, directly employing over 10,000 people. In addition to the four commercial airlines, various other entities, including airport authorities, training institutes, cargo services, and helicopter operators, contribute to the industry's overall employment figures, reaching the International Air Transport Association's (IATA) estimated total of 17,000 direct employees.

When discussing the decline in the airline business, Air Vice Marshal M Mafidur Rahman, chairman of CAAB, attributes it to inadequate compliance with licensing requirements, poor management, and a lack of economic viability among operators. However, he acknowledges that efforts are being made to assess the capacity of airlines to ensure their sustainability, with the guidance of international aviation organisations.

The future outlook for the aviation industry in Bangladesh is promising. Data from CAAB indicates that the country's airports handled 9.63 million international passengers in 2022, surpassing the pre-pandemic 2019 figure of 8.59 million. This growth is attributed to a rising number of travellers, including migrant workers, non-resident Bangladeshis, and the expanding middle and upper-class segments of the population.

Projections suggest that air travel to and from Bangladesh will double by 2031, with anticipated annual growth rates of 6% for international travel, 8% for domestic travel, and 6.4% in total. As a result, there is a pressing need for more aircraft to capture the market opportunities, according to Juan Camilo Rodríguez, manager of Wide-body Market Development at Airbus.

Boeing, another aerospace giant, has released optimistic forecasts for future aircraft sales, particularly in Asia, with Bangladesh leading the way. Boeing's Commercial Market Outlook predicts that by 2032, Bangladesh will achieve an annual economic growth rate exceeding 5%, twice the global average, leading to nearly 8.5% annual growth in air traffic.

Mofizur Rahman, the secretary-general of the Aviation Operators Association of Bangladesh, emphasises that while domestic travel may face challenges, international travel is on the rise. 

"If you look at the big picture, while domestic travel might slow down a bit, international travel is on the rise, with an expected annual increase of 6% to 7%," he said. "Our strategy revolves around staying attuned to passengers' desires. We are adapting our fleet to align with their evolving needs and our future growth. We remain committed to conducting annual check-ins to ensure that we are meeting the requirements of international travellers," he added.

Despite these challenges, the expansion of the airline industry in Bangladesh is dependent on investments in infrastructure, which is considered a crucial factor in ensuring its long-term success. 

Expanding also involves acquiring new planes, which is a clear indication that investing in infrastructure eventually pays off.