Airbus races to enter Bangladesh to break Boeing’s dominance
Biman board makes a policy decision to purchase two wide-bodied A350 freighters in response to Airbus’s proposal
The world's two giant aircraft manufacturers Airbus and Boeing began a new freighter race when Airbus announced the launch of the A350F programme in 2021 and Bangladesh is now caught in the race.
The board of Biman Bangladesh Airlines has made a policy decision to purchase two wide-bodied A350 freighters in response to the proposal from Airbus, the leading European manufacturer in the aerospace industry.
The decision came at the board meeting held on Wednesday, Mahbub Ali, state minister of Civil Aviation and Tourism Ministry, told The Business Standard.
With this cargo deal, Airbus will enter Bangladesh's aviation market, which is currently dominated by American company Boeing
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Biman will be adding Airbus to its fleet three decades after it first purchased aircraft from the company in 1986, which phased out in 2015.
While the national carrier has a modern and the largest-ever fleet with 21 aircraft, mostly dominated by Boeing planes, the inclusion of two Airbus planes in its fleet will cost nearly Tk4,000 crore, according to a source within the Ministry of Civil Aviation and Tourism.
Furthermore, Biman will have to train its pilots for Airbus operation, and it will need different set-ups of manpower for Airbus, which will be expensive for the airline, said a senior executive of the company.
Initially, Biman was not willing to go for a cargo deal with Airbus, but the board finally accepted the proposal as part of developing relations with the UK and France, he added.
The French aerospace firm, which has been pursuing the Bangladesh government for aviation partnership for a long time, has shown its intention to sell two wide-body cargo planes in a meeting held with Biman in the second week of April this year, according to a ministry source.
When contacted, Shafiul Azim, managing director of Biman, told The Business Standard that Airbus specified their intention about selling the A350 freighter in the meeting.
Biman has no dedicated cargo plane presently when global air cargo demand is rising fast even crossing pre-pandemic level.
Moreover, Biman's entire fleet is dominated by Boeing as Airbus has had no presence in the Bangladesh aviation industry in the last two decades when India, Malaysia, Thailand are Airbus dominated countries, according to industry insiders.
At present, 14 foreign airlines are operating cargo service targeting only the Bangladesh market. Of the 14 airlines four are using narrow-bodied aircraft and 10 are using wide-bodied aircraft, according to industry insiders. The annual cargo market size is 2.15 lakh tonnes.
A senior pilot who has long experience in cargo operation told TBS that 90% of the cargo goods are garments and there is a huge business opportunity in cargo operation which is completely under foreign airlines. If Biman wants to enter this market, it needs to start with dedicated wide body aircraft to compete with foreign airlines, the pilot added.
He also noted that Biman's marketing is very weak even in passenger flight operations. As a result, the cargo belly of passenger flights could not be used fully when 14 airlines are operating cargo flights dedicatedly.
The International Air Transport Association (IATA) in its released data for February 2023 shows that global air cargo demand rose above pre-pandemic levels.
In February, the demand for air cargo was 2.9% higher than pre-pandemic levels in February 2019 – the first time it has surpassed pre-pandemic levels in eight months.
Capacity (measured in available cargo tonne-kilometres, ACTK) was up 8.6% compared to February 2022. The strong uptick in ACTKs reflects the addition of belly capacity as the passenger side of the business continues to recover. International belly-capacity grew by 57.0% in February year-over-year, reaching 75.1% of the 2019 pre-pandemic capacity, according to IATA.
How Bangladesh becomes Airbus's target market
In February last year, the prime minister expressed her desire that Biman will internationally conduct its cargo services with its own planes.
While addressing the golden jubilee anniversary programme of the national carrier, she said Biman will be more profitable if its cargo service continues.
Later in March that year, Airbus introduced the A350 freighter at Hazrat Shahjalal International Airport to showcase its business objective. A high-level team including the Post and Telecommunication Minister Mustafa Jabbar, State Minister for Civil Aviation and Tourism Mahbub Ali, Civil Aviation Authority of Bangladesh Chairman Air Vice Marshal M Mafidur Rahman, Biman Bangladesh Airline's then Managing Director Dr Abu Saleh Mostafa Kamal visited the aircraft.
In March this year, Airbus came up with several proposals, including sales of jets and an aviation partnership with the UK and France, to the Bangladesh government at the aviation summit held in Bangladesh for the first time.
Bangladesh Aviation Summit was organised jointly by the Ministry of Civil Aviation and Tourism, the British High Commission and the Embassy of France in Dhaka on 22 March.
After the aviation summit, Airbus in a meeting with Biman specified their intention of selling cargo planes.
How Biman phased out Airbus
Biman for the first time purchased two brand new twin-engine wide-body Airbus A310 in 1986 for its fleet to operate flights across Middle-east, South-East Asia, and regional flights.
Later, it bought two more A310s from Singapore Airlines and Air Jamaica.
From the year 2013, Biman started to ground Airbus planes gradually due to technical glitches and high fuel consumption.
Biman began to add new aircraft to its fleet in 2011 when it purchased two Boeing 777-300 and gradually added more Boeing.
The Biman Bangladesh Airlines fleet currently consists of 10 wide-bodied Boeing, six narrow-body Boeing 737s, and five Dash 8 jets.
A350F and Boeing – the competition
Airbus claims the A350F is the most environmentally friendly freighter on the market. More than 70% of the A350F's airframe is made of new materials, resulting in a 30-ton lower takeoff weight. Airbus says the A350F consumes about 40% less jet fuel than its rival's Boeing 747-400F and about 20% less compared to the Boeing 777F.
In February 2021 Singapore Airlines ordered seven A350 freighters as part of its decision to move away from Boeing. The carrier currently operates seven 747-400 freighters with an average age of 18 years, which will be replaced by the A350F whose deliveries are scheduled to begin in the fourth quarter of 2025, according to media reports.
In February 2023, Tata Group-owned Air India announced buying a total of 470 wide-body and narrow-body planes from Airbus and Boeing, and the total deal value is estimated to be $80 billion as the airline expands its operations.
Of the total deal, the carrier will buy 40 wide-body A350 aircraft and another 210 narrow-body A320neo planes, according to media reports.
