• Tuesday, September 02, 2014

New carriers to trigger battle in the air

Analysts fear an unhealthy competition in the market

Suman Saha

Competition in the aviation sector is set to intensify further as two new private airlines will spread wings this year with the existing three players expanding operations on short-haul international routes.
United Airways, which launched operations in July 2007, plans to introduce flights on Dhaka-Karachi and Dhaka-Medina routes within this year. The private carrier now flies to six international destinations.
Novoair, which started its journey in January last year, plans its maiden international flight within a couple of months. US-Bangla Airlines, a new private carrier, will commence operations within a month as the carrier has already announced its flight schedule for domestic routes.
“We are now waiting for the regulator's approval,” said Akhtar Ahmed, director for sales and marketing of US-Bangla Airlines.
Another new private carrier -- Epic Airways Ltd -- plans to operate flights on domestic routes with an initial fleet of two Boeing 737s by the end of 2014, according to Imran Asif, chief executive of the airline.
The country's air travel market has the potential to grow further as the existing operators cannot meet the demand, said Asif, a former chief executive of Regent Airways.
“Epic Air aims to offer a better travel experience with competitive fares,” he said.
However, Kazi Wahidul Alam, an aviation analyst, said the new airlines will create an unhealthy competition in the market.
“Most airlines are operating flights on the domestic routes below the profit margin. The new airlines will obviously trigger a price war,” he said.
Customers may be benefitted for the time being, Alam said, adding that some operators may not survive in the long run.
Mofizur Rahman, managing director of Novoair, also echoed the same. “An increased competition may jeopardise the sector.”
He, however, ruled out the possibility of merger in the sector. “Airlines may sell their business, but won't go for merger.”
Alam, the aviation analyst, suggested the government should be more pragmatic in allowing new airlines.
The Civil Aviation Authority of Bangladesh should permit new airlines based on business viability and growth rate of passengers, Alam said.
Currently, the local carriers fly mainly on four domestic routes out of Dhaka -- Chittagong, Cox's Bazar, Sylhet and Jessore -- with the Dhaka-Chittagong route having the highest traffic flow, followed by Dhaka-Jessore.
In 2013, some 648,019 people travelled nationally by air, up 10 percent year-on-year, according to data from CAAB.
Alam, also editor of the Bangladesh Monitor, a fortnightly travel and tourism magazine, urged the local carriers not to expand regional operations.
The local airlines are yet to develop the expertise needed to operate international flights, he said, adding that a lack of skilled manpower is the main challenge for the airlines now.

The aviation market is heating up as Biman Bangladesh Airlines, the flag carrier, is also expanding international routes and re-launching full-fledged domestic operations.
Biman faces competition especially from the low-cost carriers in Southeast Asia and the Middle East.
Low-cost carriers currently account for about 15 percent of the total international seat capacity in Bangladesh, according to the Centre for Asia Pacific Aviation (CAPA).
Kuala Lumpur, which is a huge market for Bangladeshi migrant workers, is the largest destination for Biman as well as the country in terms of seat capacity, according to a report of CAPA.
Chittagong to Abu Dhabi and Dhaka to Riyadh, Kathmandu and Kolkata are also among its largest five international routes, the aviation consultancy firm said.
Currently, 26 foreign carriers operate international flights in the country and five of them are low-cost, it said.    

suman.saha@thedailystar.net

Published: 12:01 am Monday, July 07, 2014

Last modified: 10:23 pm Monday, July 07, 2014

TAGS: Dhaka-Karachi Dhaka-Medina routes private carrier US-Bangla Airlines Epic Airways Ltd New carriers

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