Etihad Airways is set to suspend its flights between Abu Dhabi and Dhaka from October 1, making it the fourth airline to suspend operations in Bangladesh in recent times.
The airline though will continue to serve the country through its partner airline, the Indian Jet Airways, which operates daily flights to Dhaka from Mumbai, New Delhi and Kolkata, said a spokesperson of the Abu Dhabi-based carrier.
The spokesperson gave no reason for the airline's bringing down the curtains on the 12-year-old popular route, but the move can be viewed as rationalisation of capacity by the UAE flag carrier, which reported second consecutive year of losses yesterday.
Etihad started flights to Dhaka in May 2006 and soon became popular among long-haul travellers to the UK, the US and Canada.
It registers about 90 percent load factor from Dhaka and about 70 percent for its daily inbound flights, said industry people.
“Along with our travel agency partners, we will work closely with impacted guests to notify them of the changes to their itineraries and re-accommodate them on alternative flights,” the Etihad spokesperson said.
The airline communicated the decision first to its travel agents in Bangladesh in the first week of June and offered re-booking or re-routing as well as cancellation option for passengers who bought tickets on or before June 6, 2018 for travel on or after October 1.
Etihad is yet to formally inform the Civil Aviation Authority of Bangladesh (Caab) about its decision, said Chy M Ziaul Kabir, its director of flight safety and regulations.
The announcement from Etihad comes at a time when the flag carrier of the UAE embarks on a major turnaround plan following consecutive years of losses.
Yesterday, the airline reported a $1.52 billion loss for 2017, down 22.05 percent from a year earlier.
Etihad has been overhauling its strategy since 2016 with changes to top management, dropping unprofitable routes and retiring operationally costly aircraft, according to Reuters.
Industry people said Etihad's shock decision might have a link with last month's directive from Caab that asked all foreign airlines operating business in Bangladesh to appoint general sales agent within six months.
In a letter to foreign carriers on May 27, Caab cited a provision of the Civil Aviation Act 2017 that requires foreign airlines to appoint general sales agents. The entity will have to be registered in Bangladesh and be fully owned by a Bangladeshi citizen, the letter said.
However, Caab Director Kabir said Etihad's decision could not have been influenced by the regulator's letter.
“Operational closure is a major decision. I think Etihad has taken the decision long ago.”
Foreign airlines normally communicate with the Caab and the ministry through their forums when they find any policy unfriendly or face any problem.
“None has talked to us about the issue yet,” he said.
Except for five including Etihad, all foreign airlines have GSA solely owned by Bangladeshis, according to Kabir.
Kazi Wahidul Alam, editor of the Bangladesh Monitor, a tourism and aviation industry fortnightly, said various factors such as the VAT dispute, delays in sending proceeds from Bangladesh, and the latest move by the authorities requiring GSA to be fully owned by Bangladeshis might have influenced the flight suspension decision.
“Etihad's suspension will cut competition and will thus reduce the scope for travellers to enjoy competitive ticket fares,” he said, adding that this will send a bad signal to the aviation industry in the world.
Last year, Oman Air, Bangkok Airways and Thai Smile wrapped up their operations in Bangladesh after the route turned commercially unviable for them.