Will fresh move to salvage Biman succeed, at all?

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Shahiduzzaman Khan The government is reported to have been looking for a strategic partner for Biman Bangladesh Airlines. International tender has been floated to this effect. Making the carrier operationally sound and financially viable has been the reason, cited for finding out such a partner. Finding a strategic partner for Biman is hardly any new development at all. In fact, the search for a partner has been under consideration for so many years. Yet things have not moved positively and all such efforts, until the latest floatation of an international tender, have so far yielded no positive result. Some years ago, experts had prescribed Biman as 'clinically dead' as no solution was in sight for its survival. They had also suggested that the ailing airline should better be shut down. Finance Minister AMA Muhith had echoed the similar views. The army-backed last caretaker government had converted Biman into a public limited company in a bid to make it financially viable. After it was turned into a public limited company, Biman made some operational profits for two consecutive years during the last caretaker government. But after that, it has plunged itself again into a deep crisis. It has continued to be a loss-making entity as usual as before. The national flag carrier now faces a daunting challenge for its survival. Its performance in most of the sectors is awfully dismal. It had to suspend flight operations on many routes due to mismanagement. Biman failed to handle the issue of excess manpower. This still remains to be one of its main problems. Under an earlier voluntary retirement programme in 2007, 1876 officers and employees out of 6,000, had resigned. But many of them complained later that they had to seek such retirement under pressure. However, such resignation of a large number of staff paved the way for making Biman a public limited company. But all pervasive corruption has been sapping the vitality of Biman, making it increasingly difficult to stand on its own. In its rank and file, corruption seems to rule the roost. Reports were galore that a section of Biman staff, cabin crew and its ground men were involved in gold and currency smuggling. In many cases, some of the Biman staff members were caught red-handed. Some trade union leaders there at Biman reportedly made huge fortune through corrupt practices. Irregularities in Biman are, indeed, so galore that no good move there appears to have moved in the right direction. The Ministry of Civil Aviation does hardly care to give a serious attention to the affairs of Biman. No serious efforts have so far been given by the government to save the national carrier before. The national flag carrier incurred a record loss of Tk 5.45 billion in the last fiscal year (2011-12) alone. This amount included a substantial amount of losses on account of reported payments of high interest changes to different government agencies and financial institutions. Biman lost a large amount of revenue due to suspension of some of its routes. Dhaka-New York was a popular route for the Bangladeshis that Biman had suspended. This route was so popular that Bangladeshis felt at home to travel on this route. Why this route became non-viable remains a puzzle. In fact, Biman carried passengers up to the full capacity of its aircraft on this route. As such, the question of operational loss on this route should not have arisen at all. One wonders why the privatisation process was not initiated earlier to save the Biman from its dire financial straits. The authorities appeared to have been reluctant to privatise the national flag carrier for some unknown reasons. The latest move of the government to find a strategic partner is certainly a welcome move to involve the operational expertise and management skill that are available in the private sector on a global scale. The strategic partner, if it is found out through a transparent process, will be expected to run and manage the national flag carrier. The offer has been made to the foreign airlines for either buying a stake in the airline or take responsibility for its management. There have not been any serious efforts on the part of the government to make Biman run properly on a commercial basis. It has always been treated just as a national flag carrier, no matter whether it earns profits or incurs continuous losses. False prestige, as it seems, has been more important than commercial viability. In the past, Biman opened many domestic and international routes without doing any proper cost-benefit analysis. There was a sort of wish-list of some powerful masters and Biman had to satisfy those masters by getting itself involved in areas of unprofitable business activities. The issue of commercial viability did not appear to have played any role in making decisions on opening its routes. Theoretically speaking, Biman should have been allowed to go out of business long ago to help avert its colossal financial losses over the years due to its inefficiency, corruption, and ill-conceived opening of many of its domestic and international routes. Such losses have entailed too heavy a load on the public exchequer, directly or indirectly. If Biman needs regular doses of funds, this implies that the only way to properly manage it is the continued injection of public money into loss-making white elephants like that of Biman. How long should it continue? It should not be the business of the government to continue to provide financial support to perennial loss-making publicly owned commercial enterprises. Let Biman meet its own fate if it cannot run on profits. How long will the taxpayers of the country continue to support a terminally ill patient? Bangladesh is now reportedly eyeing some of the world's best airlines to become its strategic partner. These are Singapore Airlines, British Airways, Qatar Airways and Thai Airways. Of them, Thai Airways was earlier given the responsibility of managing Chittagong International Airport. But it had to get its hands off there, in the face of stiff resistance from Biman and civil aviation employees. For finding a strategic partner, no casual or half-hearted move will work. The government should rather make coordinated efforts to go for 'real' privatisation of Biman sooner rather than later. Every professional airline has a master plan for, at least, five years. Has Biman any such plan at all? This time, the Ministry of Finance (MoF) has given another chance to Biman. In addition to finding out a strategic partner, Biman needs to come out with a credible five-year business plan for its survival in a fiercely competitive global aviation market. After such exercises are done, the MoF will be in a better position to providing sovereign guarantees for procurement of Biman's new aircraft at the pre-delivery stage. All concerned will then be able to make a proper assessment of the response by the national carrier to such a directive of the MoF. szkhan@dhaka.net