Entry of Chinese company kicks off price war in transport sector
Sunday, 23 March 2008
Jasim Uddin Haroon
A major price war has begun in the country's transport sector after a Chinese company launched its luxurious buses in the lucrative Dhaka-Chittagong route, undercutting rivals by at least 33 per cent, officials said Saturday.
Ilen Express, owned by Shanghai-based Shenzen Staunch Industrial Corporation, has already started its operation on Dhaka-Chittagong route since March 13 and it is expected to launch full commercial operation from April 1 next.
"We have got permission from Board of Investment to operate air-conditioned bus services in the country," general manager of Ilen Express, Mezbah Uddin Ahmed.
The company has fixed its air-con Dhaka-Chittagong fare at Tk 300 a ticket, which is at least 33 per cent less than the fare offered by major operators such as Greenline, Neptune, Saudia-S Alam, Sohag and Silkline.
"We will offer the same services being offered by our main rivals. If we can ensure at least 75 per cent occupancy, we can make money easily," Ahmed said.
Ilen will also launch services for the most lucrative Dhaka-Cox's Bazar next month, offering just Tk 400 per ticket, which is 40 per cent less than its major domestic competitors.
Dhaka-Chittagong-Cox's Bazar is the major transport route in the country, with an annual revenue of over Tk 6.00 billion, according to the operators
The market has been growing at over 20 per cent, in the last three years, amid a boom in internal tourism.
Ahmed said the company, now operating Chinese-assembled Nissan air-conditioned buses, would gradually move into other busy routes including Dhaka-Sylhet, Dhaka-Khulna and Dhaka-Benapole, "offering the most competitive ticket rates in the country."
"At present we are operating only 20 buses. But we'll launch 50 more within months," he said.
Major transport players said they have been observing the situation 'very closely,' and have raised question whether a majority-owned foreign company can operate in the sector
"We are not afraid of arrival of Chinese company. But obviously, we are observing the situation very closely," Abdus Salam Labu, vice chairman of S Alam Group, country's one of the largest bus-transport companies, said
Labu said, they were seeking to know whether a fully-owned foreign company can operate in the country's transport sector.
"We have to see what the government investment policies and regulations are in the transport sector. As far as we know, transport sector is not open for foreign investors," he said.
"But if that is the case, we have to set new strategies for our survival," he added.
Kafiluddin Ahmed, Managing director of Saudia, another top transport operator, said he would also raise the issue to the Board of Investment (BoI).
"But if our law allows them to operate in the country, I don't have anything to say. In that case, we will fight them hard, without lowering fares. We are confident of our success," he said.
A major price war has begun in the country's transport sector after a Chinese company launched its luxurious buses in the lucrative Dhaka-Chittagong route, undercutting rivals by at least 33 per cent, officials said Saturday.
Ilen Express, owned by Shanghai-based Shenzen Staunch Industrial Corporation, has already started its operation on Dhaka-Chittagong route since March 13 and it is expected to launch full commercial operation from April 1 next.
"We have got permission from Board of Investment to operate air-conditioned bus services in the country," general manager of Ilen Express, Mezbah Uddin Ahmed.
The company has fixed its air-con Dhaka-Chittagong fare at Tk 300 a ticket, which is at least 33 per cent less than the fare offered by major operators such as Greenline, Neptune, Saudia-S Alam, Sohag and Silkline.
"We will offer the same services being offered by our main rivals. If we can ensure at least 75 per cent occupancy, we can make money easily," Ahmed said.
Ilen will also launch services for the most lucrative Dhaka-Cox's Bazar next month, offering just Tk 400 per ticket, which is 40 per cent less than its major domestic competitors.
Dhaka-Chittagong-Cox's Bazar is the major transport route in the country, with an annual revenue of over Tk 6.00 billion, according to the operators
The market has been growing at over 20 per cent, in the last three years, amid a boom in internal tourism.
Ahmed said the company, now operating Chinese-assembled Nissan air-conditioned buses, would gradually move into other busy routes including Dhaka-Sylhet, Dhaka-Khulna and Dhaka-Benapole, "offering the most competitive ticket rates in the country."
"At present we are operating only 20 buses. But we'll launch 50 more within months," he said.
Major transport players said they have been observing the situation 'very closely,' and have raised question whether a majority-owned foreign company can operate in the sector
"We are not afraid of arrival of Chinese company. But obviously, we are observing the situation very closely," Abdus Salam Labu, vice chairman of S Alam Group, country's one of the largest bus-transport companies, said
Labu said, they were seeking to know whether a fully-owned foreign company can operate in the country's transport sector.
"We have to see what the government investment policies and regulations are in the transport sector. As far as we know, transport sector is not open for foreign investors," he said.
"But if that is the case, we have to set new strategies for our survival," he added.
Kafiluddin Ahmed, Managing director of Saudia, another top transport operator, said he would also raise the issue to the Board of Investment (BoI).
"But if our law allows them to operate in the country, I don't have anything to say. In that case, we will fight them hard, without lowering fares. We are confident of our success," he said.