Bangladesh’s stake in air travel business

The rise of air travel in South East Asia has been phenomenal and Bangladesh is no exception. 

The economic growth brought in an increase of disposable income within the middle class group, and due to the increase in capacity resulting in fares going down, air travel has become quite affordable to the public.

As we can observe, there is a positive correlation of the passenger growth rate with the GDP growth rate.

This is because of three broad reasons - a higher GDP equates to higher purchasing power, which incentivizes many to choose air travel within the country as an alternative to trains and buses. 

Given that the business environment is growing quite rapidly, saving time is quite crucial.

The rise of air travel has significantly increased capacity dumping on each and every point on the domestic route. The fear is, can the airlines sustain their existence? 

Capacity dumping is the airline strategy of adding additional flights to a route in an attempt to drive a competitor out of business or off the route.

The cost of aviation operation is quite high in Bangladesh as compared to within the region. Programmes such as "URAAN" in India is one good example, where the government is promoting air travel from all points where major airlines are reluctant to operate. 

This is a clear indication that the Indian government is keen to promote air travel as well as make sure that local airlines prosper.

The three slides from the VOA (Value of Aviation) of Bangladesh 2018 report by IATA (International Air Transport Association) clearly indicate where Bangladesh will be seen in the year 2036, a $12.2 billion contribution to the country's GDP with 3.7 million jobs in the hospitality industry. There are very few countries in the world with so much potential.

The key drivers to sustain such growth are as the following:

• Infrastructure in terms of airport, cargo terminals, ground handling enhancements, customer service etc.
• Customer friendly and efficient immigration formalities such as usage of technology and AI (artificial intelligence)
• Aviation policies to sustain and grow the local airlines
• Develop world class training institutes in aviation management
• Introduce aviation management degrees at university level
• Sustainable tourism policies to develop tourism in Bangladesh (eco and religious tourism can be developed faster)
• Follow best practices of the regional aviation policies and introduce them to Bangladesh for sustaining the development of the aviation sector

Bangladesh, which is moving towards a strong developing country, will be able to foster advancements in the area of aviation by taking steps towards opening up and removing financial barriers by developing masterplans for making this country the next hub of connectivity.

[The writer is the deputy managing director of Regent Airways and director of Chattogram Chamber of Commerce and Industry.]