Biman in trouble with largest fleet, lowest use

With the largest ever fleet size, the national flag carrier Biman Bangladesh Airlines is now in trouble with the lowest utilisation of aircraft, burning more cash by increasing operating cost of the company.

The average aircraft utilisation for Biman came down to 3.42 hours a day in October last year, whereas the average standard efficient utilisation of an aircraft is above 10 hours. The company saw its highest utilisation of aircraft in July 2019 when its planes were in service for 12 hours a day.

Efficient utilisation varies from one type of aircraft to another. For instance, the efficient utilisation hour for a Dash-8 aircraft is eight hours, while it is above 10 hours in the cases of 777 and 737 airplanes.

Biman's aircraft utilisation hour, however, has improved in recent months, thanks to an increase in the number of flights, but it is still far below the standard level.

When asked about the low utilisation of aircraft, Captain ABM Ismail, director (Flight Operations) of Biman, refused to comment on this.

Tight travel restrictions across the world amid the pandemic situation limited aircraft utilisation for Biman, ballooning cash burning of the cash-strapped company that is surviving with a Tk1,000 crore loan under the government's stimulus package.

Moreover, new aircraft continued to join the Biman fleet even during the pandemic, which had been ordered before the Covid-19 outbreak.

During the pandemic situation, two brand new Dash-8 aircraft joined the Biman fleet – one in November last year and another in February this year – taking the total size of the fleet to 20. One more Dash-8 is scheduled to arrive this month.

Even though its fleet has continued to expand, Biman could not increase the number of flights to make sure a good utilisation of its aircraft amid tepid demand as the emergence of new variants of the Covid virus has further tightened travel restrictions worldwide.

For instance, Biman resumed its Dhaka-Kathmandu flight on 18 February with a plan to operate two flights a week. But, the company got little response from tourists due to high ticket prices and other travel limitations.

On the first day, the 162-seat 737 aircraft flew with 100 passengers and returned with less than 80 passengers.

The fare of the flight has been fixed at above Tk30,000, which is 30% higher compared to the pre-Covid price.

Alongside bearing the hiked price of ticket, travellers have to count an extra cost of up to Tk6,000 for obtaining the Covid-19 test report required twice – at the time of departure from the country and upon arrival at the destination airport.

Hence, flying is now unprofitable for both the airline company and travellers, widening losses for Biman and compelling it to keep its aircraft grounded.

Monthly passenger revenue, which rose to above Tk600 crore in the pre-Covid time, came down to less than Tk200 crore in October last year, according to Biman.

During the pandemic, Biman lost 70% of its passengers. It saw the number of passengers reaching a record high of 2.61 lakh in July 2019, which came down to 81,000 in October last year.

When contacted, Dr Abu Saleh Mostafa Kamal, the new managing director of Biman appointed last week, said they are making plans to improve the efficiency of aircraft utilisation.

He said he needed to know the entire situation first.

From 23 December last year, Biman has been operating only 23 weekly flights to different destinations.

The national flag carrier is ready to resume operations to Tokyo, Japan and commercial operations to Chennai in India. Commercial flights to Toronto are underway and that to New York is in the process.

Meanwhile, the International Air Transport Association (IATA) has released a new analysis, showing that the airline industry is expected to remain cash negative throughout 2021.

The previous analysis (November 2020) indicated that airlines would turn cash positive in the fourth quarter of 2021.

At the industry level, airlines are not expected to be cash positive until 2022.

Estimates for cash burn in 2021 have ballooned to the $75 billion to $95 billion range from a previously anticipated $48 billion.

In the analysis, the IATA said it is already clear that the first half of 2021 will be worse than what was anticipated earlier. This is because governments have tightened travel restrictions in response to new Covid-19 variants.