Airlines reel under weight of Tk 60b CAAB surcharges

Different airlines in the country are facing financial burdens due mainly to excessive surcharges imposed by the Civil Aviation Authority of Bangladesh, according to operators.
The Civil Aviation Authority of Bangladesh (CAAB) has claimed a total of Tk 75.09 billion from the country's six airlines -- both operational and now defunct, show documents.
Of this amount, a whopping Tk 60.37 billion is a surcharge, while the remaining sum is the original claim including tax and value-added tax (VAT).
The Aviation Operators Association of Bangladesh (AOAB) -- a platform for the country's private airlines -- has consistently demanded that CAAB set reasonable surcharge rates but to no avail.
"Surcharge rates in our neighbouring countries, including India, are much lower than us," Mofizur Rahman, secretary general of AOAB and managing director of Novoair, told The Financial Express.
According to sources at various airlines, if any airline fails to make timely payments to CAAB, it incurs an additional 72 per cent surcharge annually.
They also said that many airlines are struggling to pay their dues due to the accumulating surcharges. Even, some airlines have gone bankrupt due to the overwhelming debts.
Currently, four airlines are operating the the country. They are the national flag carrier Biman Bangladesh Airlines, Novoair, US-Bangla and Air Astra.
Over the past few years, Regent Airways, United Airways and GMG Airlines have wrapped up their businesses.
Four private airlines -- Regent Airways, Novoair, United Airways and GMG Airlines -- owe a total of Tk 12.22 billion till May 2023, CAAB data shows. Of this amount, Tk 9.04 billion is surcharges.
Of them, now defunct Regent Airways owes CAAB Tk 4.08 billion. The original debt of the airline is Tk 1.41 billion, while the remaining Tk 2.37 billion is due to surcharges imposed on the debt. The airline also has outstanding dues of Tk 293.12 million in VAT and Tk 953 in income tax.
Novoair owes CAAB Tk 294.77 million. The original debt is Tk 239.02 million, with the remaining Tk 14.38 million due to surcharges. Novoair also has an outstanding VAT payment of Tk 41.37 million.
Defunct United Airways owes Tk 3.88 billion to CAAB. The original debt is Tk 567.62 million, while the remaining Tk 3.26 billion is due to surcharges imposed on the debt. The airline also has an outstanding VAT of Tk 56.57 million and income tax of Tk 0.21 million.
Similarly, defunct GMG Airlines owes a total of Tk 3.96 billion. Its original debt is Tk 565.04 million, with an additional Tk 3.38 billion in surcharges. The airline also has an outstanding VAT of Tk 14.6 million and income tax of Tk 38,058.
According to CAAB, Biman Bangladesh Airlines owes Tk 62.06 billion as of May 2023. This includes the original debt of Tk 10.74 billion and Tk 51.32 billion in surcharges, VAT and income tax.
However, Biman authorities contest these figures. They claim their current debt to CAAB is Tk 8.38 billion, with a breakdown of Tk 46.90 billion in surcharges, Tk 4.86 billion in VAT, and income tax.
Biman has also requested the Ministry of Civil Aviation and Tourism to waive the surcharges.
Tahera Khondoker, general manager (Public Relations) of Biman Bangladesh Airlines, told the FE that Biman has been paying current bills to the CAAB regularly since 2016. It paid Tk 5.97 billion in the past one year.
Although CAAB had not made any claim from private airlines US Bangla and Air Astra until May 2023, a letter issued in January this year said US Bangla owes CAAB a total of Tk 804.2 million in aeronautical and non-aeronautical charges, including VAT and income tax.
Out of this outstanding amount, Tk 4.73 million was imposed as a surcharge on the original amount.
Aviation Operators Association Secretary General Mofizur Rahman said they are constantly demanding a fixed and reasonable surcharge rate. However, the government authorities concerned are not heeding their requests.
Now, some airlines are also facing legal action as they defaulted on paying the dues.
Mohammad Moazzem Hossain, Director (Finance) of the CAAB, told the FE they have initiated legal actions to recover dues from the defunct airlines.

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