Biman still reels from passenger loss
Biman Bangladesh Airlines is still suffering from a loss of customers after hiking the fares on different international routes early this year, although the national flag carrier brought down the increased fares by 60 percent within a few weeks of the hike.
After the rise in fares in January, Biman lost around 50 percent of its passengers on different routes, which prompted the authorities to bring down the fares.
Sources said, even after a cut in the fares, the airline could not regain 50 percent of its lost passengers on the Dhaka-London route, while it is yet to win back 20 percent of its lost passengers on profit-making routes to Saudi Arabia.
Biman has already incurred a huge loss due to the fare increase in the name of surcharge, while analysts said the airliner will have to bear a long-term consequence for the decision.
Biman insiders said the tariff committee, which is responsible for taking such decisions, was restructured several months ago, making Biman managing director as its chief.
The new committee does not have the expertise in such delicate issues, they claimed.
The committee took the decision to increase the fares without doing any market analysis and without asking for opinion from Biman's customers and marketing departments, said the sources.
"The authorities did not consult us before increasing the fares," a Biman official working at a station in Saudi Arabia told The Daily Star. He said they requested the authorities to review the decision as Biman is suffering from a serious passenger loss due to the fare hike.
Wishing not to be named, he said, had the authorities increased the fares after a market analysis and taken their opinions, Biman would not have incurred the loss.
Depending on the distance of travel, fares were increased initially ranging from Tk 712 to Tk 4,976, but it was reduced by 60 percent later.
"The quick change of decision to slash the fares suggests it was taken without proper market assessment," said Abul-Muyeed Chowdhury, former managing director of Biman.
Biman Managing Director Zakiul Islam told The Daily Star earlier that they increased the fuel surcharge to be consistent with the actual fuel costs, but revised the decision later due to its adverse effect.
Officials of different foreign airlines operating from Dhaka said they often increase or decrease fuel surcharge keeping consistency with the fuel prices on the international markets, so the increased fares never become a burden on the passengers.
Biman increased the fares after almost three years as it incurred around Tk 80 crore losses in fiscal 2009-2010. Earlier in 2007, Biman hiked the fuel surcharge, but cut it down later.
"Biman should not have decreased the fuel surcharge in 2007," said an official of Qatar Airways.
“Despite the recent increase, Biman's fuel surcharge is low compared to other operators, and the airline can logically increase the fuel surcharge on some routes where it has monopoly,” he said.
The airline will have to face serious losses due to a long-term effect of the hike, as it will be a tough task to regain passengers who have already discarded the airline, observed Kazi Wahidul Alam, editor of aviation and tourism fortnightly The Bangladesh Monitor.
They should have upgraded the quality of services before increasing the fares, he added.
"If you want to increase the fares, you need to assess the market first. Now Biman is losing its market share to competitors and often struggles to maintain its schedules. In such a situation, the decision to increase the fares was very unjustified," said a senior journalist and an aviation analyst, Raquib Siddiqi.
He said the present Biman management is not fit for airline management, as none of them has any expertise in aviation.
Chairman of the Board of Directors of Biman Air Marshal Jamal Uddin Ahmed said the tariff committee took the decision taking everything into account.
When asked, how much loss Biman had to incur for the decision, he said he had no updated information about it.