Due to arrears, foreign airlines increasing air fares in BD

Due to arrears, foreign airlines increasing air fares in BD

Dhaka, May 01 - The foreign airlines are increasing the ticket price as they cannot take the money from Bangladesh to their own country. They owe 32 million dollars stuck in Bangladesh.

In such a situation, International Air Transport Association IATA has urged Bangladesh to pay the dues quickly by accusing Bangladesh of violating the international agreement.

In a press release on Wednesday, April 24, the agency said, Bangladesh and Pakistan alone owe more than $720 million to international airlines. Of this, 32 million dollars is owed to Bangladesh.

Association of Travel Agents of Bangladesh ATAB says that due to the dollar crisis and price increase in Bangladesh, airlines are facing a crisis in paying their bills. That is why the amount of arrears has increased so much in the last one to one and a half years.

Atab president Abdus Salam Aref said, "Due to this crisis, as the price of tickets for traveling abroad from Bangladesh has increased, the number of tickets sold has also decreased."

Aviation experts say, due to this arrears, the image of Bangladesh in the international world is getting damaged, besides, the price of air tickets in Bangladesh is constantly increasing uncontrollably.

Because of this, many people are traveling from Bangladesh without buying tickets or buying tickets from outside the country at low cost.

Aviation expert and former director of Bangladesh Biman Kazi Waheed-ul Alam said, "Due to this arrears, last year also IATA gave notice to three other countries besides Bangladesh-Pakistan. In the last one year, those three countries have come out of this situation. But we were unfortunate not to come out of it.”

Civil Aviation Authority (CAB) Chairman Air Vice Marshal M. Mofidur Rahman said, "Due to the dollar crisis in the country, the money of foreign airlines was stuck. Now slowly various airlines are getting them.”

Statement alleging breach of contract

Last Wednesday, the International Air Transport Association (IATA) published a notification on its website and Facebook page. It urged Bangladesh and Pakistan to pay their dues to avoid accusations of violating international agreements.

According to the statement, airlines owe 720 million dollars in the market of Bangladesh and Pakistan. Not getting this money has increased their suffering.

The statement said that the delay in payment of the dues is a violation of international obligations in bilateral agreements and increases the rate of risk for the airline.

Out of this money, Bangladesh's arrears stand at 32 million dollars. And Pakistan owes 399 million dollars. The statement urged to pay the dues.

Philip Goh, IATA's vice president for the Asia-Pacific region, said in a statement said that timely payments to countries were important to cover dollar-based costs such as lease contracts, spare parts, overflight fees and fuel.

Goh said in the statement that the delay in payment of the dues is a violation of international obligations in bilateral agreements and increases the rate of risk for the airline.

A former director of Bangladesh Biman said  "If other countries in arrears can pay their debts, then Bangladesh should also pay on time. " 

Why this crisis?

Currently around 30 international foreign airlines are operating flights in Bangladesh. These airlines accept their payments through the International Air Transport Association or IATA.

Various travel agencies sell tickets and pay IATA. But ultimately the ticket sales from Bangladesh are discounted through Bangladesh Bank.

Kamruzzaman Roni, the owner of a private travel agency in Bangladesh said, "We sell the tickets of foreign airlines and give them to IATA. The money is in IATA's account. But IATA has to take this money from here in dollars. Bangladesh Bank may not discount this dollar."

This crisis is mainly due to non-payment of ticket money from Bangladesh Bank.

Atab President Aref said, "Since there is currently a shortfall in Bangladesh's foreign exchange, this money is being approved gradually. Many times, even after the approval, there may not be enough dollars in the schedule bank, so it is too late for the companies to get this money.” The phenomenon of withholding revenue of foreign airlines in Bangladesh is not new.

Earlier, in a press release in December 2022, IATA announced the hold of $208 million.

And the next year i.e. in June 2023, the amount of revenue increased to about 21 million dollars. This time it stands at 32 million dollars.

Aviation experts say that this crisis has been going on for a long time. Bangladesh Bank allows some airlines to remit a portion of their earnings.

But it is not enough. Due to this, most of the airlines have stopped selling low fare tickets in Bangladesh.

Ticket prices are increasing

IATA is the regulatory body of about 300 airlines in the world. 83 percent of the world's transport is done by air. Non-payment of this huge amount of debt by foreign airlines is having a big impact on air travelers from Bangladesh.

Atab says every foreign airline wants to repatriate the money from the tickets it sells. But sometimes it is seen that this money is stuck in Bangladesh for more than a year due to dollar crisis.

Atab President Aref said, "These companies do cost of funds calculations when they see that they are losing money due to pending ticket sales. Then they are increasing the ticket prices in Bangladesh.”

What is the difference in ticket prices? In this question, Atab gave an example of the neighboring country of India. "If the price of a ticket to go from Bangladesh to Europe or Australia is 1 lakh taka, if someone buys that ticket from Kolkata, it will cost only 60 to 70 thousand taka," added Aref

He said, "Bangladesh ticket prices are 20 to 40 percent higher than neighboring countries. Due to various reasons including arrears, as the rent is increasing, it has an effect on the people of Bangladesh. Because people have to pay more money to buy tickets.”

What is the initiative to overcome the crisis?

Dollar crisis is increasing in Bangladesh since last one and a half years. The crisis started as the foreign reserves began to decrease. Earlier, airlines could remit their earnings through designated banks by buying dollars from banks. But now there is no chance.

As a result, these companies have to look to Bangladesh Bank. On the one hand, the foreign exchange crisis, on the other hand, the exchange rate of the dollar has increased in the last year.

Aviation experts say that travel from Bangladesh has increased recently. Seeing this, many foreign airlines are showing interest in coming to Bangladesh. But when they see billions of foreign airlines stuck in the bank, many companies are no longer interested.

“Many airlines have consciously wanted to increase the number of flights but they are not increasing it anymore. Instead, many are reducing the flight. When the supply decreases, the price of the product naturally increases," said Biman's former director. 

He says the faster the airlines can remit their dues through banking channels, the better for the country. This needs to be done quickly for the sake of the industry.

Atab President Aref says, we have spoken with Civil Aviation, Tourism Corporation and Bangladesh Bank. We have asked Bangladesh Bank to approve the money of the airlines quickly. So that they can quickly send money to their country. If it is not solved in this way, there is no solution in any other way.

Private Aviation Authority Chairman Air Vice Marshal M. Mofidur Rahman says, Bangladesh Bank is slowly trying to solve the crisis. The crisis will end only if the situation improves a little-BBC