• Wednesday, September 03, 2014

Biman must find partners to return to profit

Says aviation consultant CAPA

Suman Saha

Biman Bangladesh Airlines should focus more on partnerships and slow its network expansion plan if it wants to return to profitability, an aviation consultancy firm said yesterday.
The national carrier has been posting losses every year except for fiscal 2007-08 and 2008-09 since it became a public limited company in 2007, according to Bangladesh Economic Review 2014. In fiscal 2011-12, the airline recorded the highest loss of Tk 606.95 crore, while it pared the loss down to Tk 191.59 crore a year later.
“Biman could do better by focusing on its core international markets and forging partnerships to expand its network virtually,” said the Centre for Asia Pacific Aviation (CAPA).
New partners could potentially improve Biman's offline access to North America as it will help the carrier do codeshares, thereby making a one-stop product to New York, Los Angeles and Toronto unnecessary, it said.
The consultancy firm said the airline will have no trouble finding partners as it has improved product, service and reliability following its fleet renewal programme. Biman added four 777s in the first quarter of 2014, allowing the airline to phase out its DC-10 fleet.

The flag carrier plans to complete the renewal of its fleet in 2015, when it will take delivery of two new 737-800s to replace its ageing A310 fleet.
The transition from the DC-10 to 777 should significantly improve Biman's position in the international market, as the 777 is more efficient, resulting in lower operating costs. Biman should forge partnerships with one or multiple carriers globally, according to the report.
Access to Europe beyond the key destinations of Rome and London as well as to North America could be improved by working with a European or Gulf carrier or multiple carriers. A partnership with an Asian carrier could provide access to more points in the Asia-Pacific, including Australia, and the west coast of North America.
Biman has Australia in its long-term business plans, so working with a Southeast Asian carrier to serve the country could be a more practical approach, it said.
CAPA also asked Biman to focus on the business and corporate travel segment to increase its revenues.
Biman's traffic is now dominated by migrant workers, a very price sensitive segment as tickets are generally purchased by labour contractors expecting big discounts in exchange for high volumes. The airline will need to change its passenger mix for its investment in new aircraft to be converted into higher revenues, CAPA said.
The carrier will need to raise its game in the business and corporate travel segment particularly with its 777-300ER as it has configured the planes with 35 business class seats along with 385 seats in economy. The smaller 777-200ER has only 12 business class seats (and 307 seats in economy), a more appropriate mix given Biman's routes.
The carrier's 737-800s also have 12 business class seats compared to the 24 on the A310s that will be replaced.
Wooing business class passengers, however, will not be easy as there are several premium carriers serving the Bangladeshi market.
The Gulf carriers are particularly fierce competitors, pricing aggressively for labour traffic at the back while using their high standard premium products to attract business passengers heading to or from the Middle East, Europe, Africa and the Americas.Emirates is the largest foreign full-service carrier in the Bangladeshi market, with about 10,000 weekly seats and 16 weekly return frequencies.
Malaysia Airlines is the second largest full-service carrier, with three daily flights and about 7 percent share of the total international seat capacity.
On Bangladesh-Asia routes, Biman competes with Cathay Pacific Airways, Malaysia Airlines, Singapore Airlines and Thai Airways for Bangladeshi passengers.
Biman operates 10 aircraft on 22 destinations, with 19 international and three domestic.

Published: 12:00 am Friday, July 04, 2014

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