Private airlines beset with teething troubles

Despite an eagerly-awaited start, filled with great expectations, the private airlines sector in Bangladesh has lately been mired in a plethora of problems. These are typical of a nation's industrial sector which enters a new domain without having an in-depth knowledge of its basic features. The entrepreneurial zeal may have been genuine, but it eventually lost steam in the midst of harsh realities.
In short, bad days have befallen the country's private airlines sector.
As a recent report in The Financial Express says, over the last 18 years 10 private airlines entered the country's domestic and regional aviation industry. Of them, only four are now at operating stage. The rest have quit the scene unceremoniously upon incurring financial and other losses. Most of the entrepreneurs, the report observes, lacked experience in aviation management. They did not have sufficient numbers of skilled manpower and liquid cash.
Due to some features, the aviation sector is unique in itself. As an industry, it is capital-intensive and highly exclusive.
Not that the Bangladeshi entrepreneurs were unaware of these facts. Yet in a span of two decades, they had kept moving into the mostly unchartered territory. The brief history of the nation's private airlines industry is marked by the closure of companies that became experienced with time but gave way to the fresh ones. In general, a financial crisis ruled the roost in the domestic private airlines sector. Against this backdrop, the entry of new private aviation companies in the country's domestic market perplexes a lot of local experts.
However, many local aviation watchers suspect 'irregularities' in the whole game of opening businesses in the sector. Some say the malpractice resorted to by a section of sponsors is linked to monetary gains made in the process of procuring and taking aircraft on lease for operating them on domestic and regional routes. In fact, Bangladesh private airlines industry in both the domestic and regional sectors held out enormous promise. The state-run Biman, and PIA in the then East Pakistan had already created a vast aviation market domestically. During the sixties, PIA's Fokker aircraft flights connecting Dhaka with some major divisional and district towns drew an impressive clientele, which continued into independent Bangladesh with the mantle being passed to Biman. However, due to mismanagement, corrupt practices, trade unionism and many other drawbacks the national airliner eventually met the fate of other state-owned enterprises. At one stage, Biman had to shut down its smaller domestic stations.
In the era of free-market economy, private airlines operate in many countries, both rich and poor, along with those run by the state. Bangladesh did not lag behind. Private airlines entered the scene. But in spite of the initial taste of success and signs of prospects, they were compelled to beat a retreat.
The history of private airlines' operation in South Asia, especially in India and Nepal, is filled with laudable performances. In proportion to its vast size, India now operates nearly four hundred private airlines on its domestic and regional routes. Some have spread wings to reach international destinations. In India's vast fleet of private domestic airlines, the start of operation of a few dates as far back as the decade of the pre-partition twenties to thirties. However, the country too had its share of failures to keep its private airlines afloat. Since 1945, India has witnessed closure of over 40 private airways. They include Indian National Airways (1925-1945), Indian Transcontinental Airlines (1933-1948), Jamair (1946-1977), Darbhanga Aviations (1950-1962). Interestingly, a number of India's now-defunct airlines used to operate from Calcutta.
The latest exit from the private airlines sector in India was made by Kingfisher Airlines in 2013. The airlines had been plagued by acute financial insolvency in its final days. Air Sahara narrowly escaped its premature demise as it merged with Jet Airways, now one of the most profitable airlines in India.
In the Himalaya-blessed Nepal, a country that attracts foreign and regional nature-loving tourists, private airlines companies have been able to carve out a niche for themselves. Thanks to their major role in earning foreign exchange, they have long been receiving government support for their businesses.
Coming to the early days of private airlines operation in the sub-continent, one has to mention the name of Orient Airways Ltd. Founded by Mirza Ahmad Ispahani, it operated its flights in the eastern region from 1947 to 1955. It was established in Calcutta in 1946. Orient later merged with Pakistan's flag carrier, PIA.
Compared to the markets of India, or even Nepal, Bangladesh's has yet to take a professional shape. It is still in its formative stage. The operation of private airlines in the country began in the late nineties, with GMG Airlines entering the market as a pioneer in 1997. Unfortunately, GMG Airlines had to shut business in 2012. Air Parabat, another airline starting operation almost in the same period, 1998, petered out in 2011. The two airlines eventually failed to survive in the market. Financial crisis and trouble-torn management led to their exit.
The four private airlines, out of ten, that have been able to survive bad times and are still in operation are United Airways, Regent Airways, Novoair and US-Bangla Airlines, a joint venture between US and Bangladeshi investors.
Like in other airline industries in the world, the one in Bangladesh has also been beset with stiff competition for market domination. In the highly advanced as well as the fast-developing countries, the ruthless war over fare-cut has long been elbowing out the small-capital and financially vulnerable airlines. The intense competition for reducing fares has, of late, taken such a fierce turn in the USA that a lot of premier airlines had to say goodbye to business or merge with economically stronger companies. The symptoms of this business 'strategy' have already started surfacing in Bangladesh. The free-market business tool being used by a few operators will hit the other airlines hard. National flag carrier Biman might also have to take the heat.
Among other things, the private airlines sector in the country is primarily afflicted with the lack of a well-thought-out policy support. It is accompanied by continued rise in prices of jet fuel, inept selection of aircraft, dearth of skilled pilots, engineers and the related crew, etc. The local commercial aviation experts, however, home in two major discouraging factors that apparently stand in the way of the industry's smooth flourishing: high tax rates and exorbitant airport charges. The private airlines companies reportedly owe huge amounts in arrear to Civil Aviation authority of Bangladesh (CAAB). They comprise both aeronautical and non-aeronautical charges.
The prospects notwithstanding, the private aviation sector in Bangladesh lacks some basic preconditions integral to its growth. First, the entrepreneurs must have to shed their amateurism. Besides, the authorities need to identify the opportunistic operators who float airlines to make a quick buck, and thus destabilise the industry. Along with all this, the government ought to come forward with all possible supports and incentives to help the private airlines industry stand on its own feet.
Given the nation's potential for emerging as a middle-income one in the not-so-distant future, a bright future of the sector is no fancy.
The ongoing problems besetting the industry are destined to go away with the economy getting stronger. After all, we are yet to fully overcome the private aviation sector's teething troubles.
shihabskr@ymail.com