Biman to fly again?

BIMAN, the national flag carrier of Bangladesh thinks it will fly again. At least that is what the people at "Balaka," the Biman headquarters think, after taking a mega blockbuster decision to procure eight new aircraft costing $ 1.265 billion (Taka 8,728 crore). The decision was taken at a meeting of the newly created Board of Directors on March 10, and the deal was signed with the representative of the Boeing Company on March 15.
This was the first major decision of Biman after it was made a public limited company. At the moment, Biman has only eleven aircraft, including the one just leased from Nigeria. Of these, only eight can fly, of which five fly international routes. There are not many airlines in the world which can be termed as national flag carriers and have such a small fleet.
Without exception, practically all public sector ventures in Bangladesh have been run unprofessionally since 1972. In the early years of independent Bangladesh, this was understandable, as the new country did not have the required number of professionals to run the public institutions it inherited from the erstwhile Pakistan.
In later years, though the availability of professionals increased to cater to the needs of both public and private sector institutions, our public sector could not solve its management and operational problems.
Biman was sinking since the eighties. Corruption and mismanagement were endemic. It selected the wrong aircrafts for its fleet, added wrong routes to its network, and had wrong people managing it. Biman's name became synonymous with corruption, mismanagement and inefficiency.
The quality of corporate leadership at Biman was pedestrian at best. At the moment it has a liability of Tk. 700 crore, and continues to incur an annual loss of Tk. 4000-5000 crore only because of corruption says a report.
Published reports on corruption in Biman disclosed the inflated cost of purchases of items ranging from food to spare parts, where more than thirty times the actual cost had been realised in certain instances. A trim plate (a small spare part) worth Taka 9,860 was bought at Taka 5,10,000. The Biman MD in an interview disclosed this. Biman purchased each banana for Taka 45.
Biman operates in a hypercompetitive service sector, the aviation sector. In the last two decades, air travel has increased manifold. Today, people travel for business, on official duties, recreation, education, and medical treatment and, in countries like Bangladesh, to take up jobs in other countries. There are people who are settling abroad in greater numbers. They have to travel.
This is happening more in the Asia-Pacific region. According to Iata, Asia-Pacific based airlines increased their passenger carrying capacity by 42%, far higher than European and North American airlines. This rise was driven largely by huge growth in Indian and Chinese air traffic, turning Asia into the world's fastest growing aviation market.
It is estimated that by 2010, there will be 70 million air passengers in India (up from the current 25 million).
There has been a phenomenal rise in the service providers amongst the Asian countries. In countries like China, India, Malaysia, or even Bangladesh, where this sector was the monopoly of the public sector, airlines have witnessed rapid growth of private sector airlines after this sector was opened up to investors.
During the past three decades or so I have flown thousands of miles across continents in dozens of airlines, and only a very few times by Biman. Without exception, the Biman flights never departed or arrived on time, at least on two occasions I had to eat cold meals and arrive at the destination without my luggage.
On one occasion, I went to Kolkata and my luggage to Singapore! In an era when most airlines have discontinued reconfirmation, Biman can very well deny you a seat even though you have a reconfirmed one.
Ignoring all these hassles, average Bangladeshi, residing in New York or returning from Saudi Arabia, still would like to travel by his own national carrier. It makes him feel at home. He can speak his dialect and have a bite of morog pilau. But Biman could never capitalise on this opportunity, and was good at driving away many loyal customers.
Biman's lack of professionalism is total, and procurement of any number of new aircraft will be of no use unless some sort of professionalism is injected into the system.
The caretaker government turned Biman Bangladesh Airlines into a public limited company in July 2007 under a re-structuring plan to turn the loss incurring national airlines into a profitable organisation. This is a good move. However, holding all the shares of Biman was not a wise decision by the government. The sooner the shares are offloaded through initial public offering (IPO) the better it will be for Biman to build up some amount of credibility.
For the purchase of eight jumbo aircraft, which are expected to be delivered between 2013 and 2017, Biman will have to pay $1.26 billion. Of the total amount, $1.54 million will come from Biman's own coffer and the rest from US-base Exim Bank and a consortium comprising of different local banks at six percent interest.
This is a major decision taken by a caretaker government whose tenure is expected to end by the end of the year. The entire purchase is by a "state owned" public limited company from an entirely private vendor, bulk of the funding coming from local and international private sources.
How much transparency will be ensured in the entire deal remains to be seen. What if the next government smells a rat in the entire deal and scraps it? What if, after everything goes through, Biman still fails to take off? Who will bear the burden of repaying the entire cost? The people of the country would like to have a viable flag carrier of their own, but the big question is at what cost?
A few years back the Tamil Tigers blew up all the aircraft of AirLanka. Within a span of two years, the airlines were not only back on its feet but were also competing with other airlines of the region. This was possible only because professionalism was ensured, and whatever it did was very transparent.
Biman can benefit from the example of such airlines. Air travel will continue to grow in future. The opportunity for Biman to get a share of the dividend is immense. It will just have to start afresh, all transparent, all professional.

Professor Abdul Mannan is a former Vice-chancellor, University of Chittagong. Currently teaching at University of Liberal Arts, Bangladesh. [email protected].