Air ticket prices to various destinations, including Saudi Arabia, have fallen by up to 75 percent due to government intervention and the implementation of strict regulations. However, those concerned say that airfares could fall further if the pressure of additional taxes on air tickets, the monopoly of Bangladesh Biman and Padma Oil, and the dollar crisis are reduced. In addition, if more state-owned airlines are created and domestic airlines are sponsored and allowed to compete internationally, the country will be able to control the price of air tickets. At the same time, the country's dollar will also remain in the country.
The price of tickets to Saudi Arabia under the group booking scheme increased to Tk 190,000 last year. However, due to effective government measures, the price has been reduced to Tk 48,000. Some airlines are even reducing ticket prices on routes like Dhaka to Dammam and Riyadh to Tk 35,000 to Tk 40,000. The government's move, "It will not be possible to book a plane or any flight ticket without the passenger's passport and detailed information," has reduced the price of plane tickets.
However, regarding the increase in ticket prices, airlines say that ticket prices have started increasing since 2022 due to the depreciation of the taka against the dollar. At that time, the exchange rate of $1 was Tk 86 against $1, but now it is Tk 122. This is where the price has increased by 40-50 percent. Along with this, the National Board of Revenue (NBR) has increased excise duty.
Airlines were forced to raise ticket prices due to increased tariffs. Again, due to the shortsightedness of the previous government, the airline companies were unable to collect refunds on ticket sales as reserves were dwindling. This is one of the reasons for the increase in fares and reduction in the number of flights. Apart from this, the high price of jet fuel, the skyrocketing landing-parking of civil aviation and the additional ground handling charges under the sole dominance of Biman Bangladesh Airlines are also among the reasons for the increase in ticket prices.
"All charges, including ground handling charges, landing-parking charges, in our country are high. If the charges are high, why won't the fare be higher? Government taxes on plane tickets are increasing day by day. The burden of these taxes is falling on the passengers. We have discussed these issues many times. However, the comment of those who make such decisions is that air passengers (well-off) can afford these taxes. However, 80 percent of our passengers are workers from South Asia and the Middle East," said Muhammad Ariful Islam Rajan, Country Head of Salam Air Dhaka office.
He also said that taxes can be imposed on tickets, but it must be bearable for passengers. On a route like Malaysia where the fare is Tk 40,000, it cannot be justified to impose taxes and fees of Tk 15,000.
Saudia Airlines GM Rafiqul Islam told the Khaborer Kagoj that General Sales Agents (GSAs) have no power to increase the airfare. Because an airline's fare is determined by a combination of many factors - such as route competition, load factor, seasonality, supply-demand balance, global migration trends, the airline's commercial business model, local operating costs, etc. Considering these factors, the basic fare or base fare is determined and other fees and surcharges including VAT, advance income tax, development fees, airport charges, etc. are added to it.
Airlines also categorize fares based on when the booking is made or how many seats are being sold at a time. For example, if you book your ticket well in advance, you can usually get a cheaper ticket, while if you book your ticket far in advance of the departure date, the price will usually increase significantly. In addition, the price is usually lower when buying many tickets at once (10 or more). Also, the price of tickets increases abnormally before any long holiday, big festival or event. Especially, the demand for tickets increases before Eid, Puja, Easter Sunday or Christmas.
Aviation expert ATM Nazrul Islam told Khabarer Kagoj that Bangladesh needs to create multiple state-owned airlines like other countries to ensure that the price of air tickets is under control within the country. These may be managed by private individuals, but the organizations will be government-owned. Then they can create competition on ticket prices.
Apart from this, instead of a few foreign airlines, many airlines should be invited to the country. Along with this, domestic private airlines should also be sponsored. They should be given some facilities to grow. In this, the country's dollar will remain in the country. In that case, surcharges and various aeronautical charges will have to be reduced. In addition, the monopoly of Biman Bangladesh Airlines in ground handling and the monopoly of Padma Oil, the airline's oil supplier, will also have to be broken. If these costs can be reduced, it is expected that the ticket prices will come down further. The government will have to take the initiative for this.
An analysis of the reasons for the increase in airfares in Bangladesh has shown that-
Increase in the price of the dollar, depreciation of the taka
Another reason for the increase in air ticket prices in the country is the increase in the price of the US dollar and the depreciation of the taka in the last two years. Two years ago, in January 2023, the rate per US dollar was Tk 102, and now it is Tk 122.
Foreign airlines have to pay all charges in US dollars, so the depreciation of the rupee is also responsible for the increase in ticket prices.
Foreign airlines have increased fares after not receiving timely payments
Another reason for the increase in air ticket prices is the inability of foreign airlines to make timely payments due to the dollar crisis. According to the International Air Transport Association (IATA), foreign airlines still receive 165 million US dollars or Tk 2,190 million from Bangladesh. Airlines are being discouraged from selling tickets to Bangladesh due to not receiving dollars from Bangladesh Bank on time. They have increased the price of tickets from Bangladesh by about 30 percent. That is, they are charging an additional 30 percent for tickets purchased from Bangladesh, compared to the fare they would pay for tickets purchased from other countries.
NBR's excessive tax
NBR's excessive tax and ticket prices have increased due to the increase in excise duty. Airlines say that the amount of travel tax and excise duty collected from the NBR on a plane ticket from Bangladesh is almost three times higher than that collected from airports in South Asia and the Middle East.
The analysis shows that the Bangladesh government currently collects Tk 9,890 in tax per passenger when buying tickets for five routes from Dhaka to Singapore, Dubai, Oman, Sharjah, and Kuala Lumpur. However, on the same route, the Malaysian government charges Tk 2,568 in taxes, Singapore charges Tk 5,878, Oman charges Tk 3,879, and Dubai and Sharjah charge Tk 4,332. This means that if a passenger from Bangladesh travels on these five routes, he has to pay an additional tax of Tk 7,000. The taxes collected by the NBR along with the ticket price include Tk 4,000 as travel tax and Tk 2,500 as excise duty.
Apart from this, before 2023, no travel tax was charged to passengers on domestic flight tickets in Bangladesh. However, it was initially set at Tk 200 and later doubled to Tk 400, currently. A travel tax of Tk 2,000 is currently being collected with travel tickets in SAARC countries, which was previously Tk 1,200. In other countries, this travel tax has been almost doubled to Tk 4,000; which is added to the price of the passenger's ticket.
Monopoly of Padma Oil
Domestic and foreign airlines say that one of the reasons for the increase in plane ticket prices in Bangladesh is the price of jet fuel. Padma Oil Company, under the Bangladesh Petroleum Corporation (BPC), is the only one that imports and sells jet fuel. They monopolize or increase prices in their own way. Currently, jet fuel costs US $ 75 per liter. However, the same oil is sold for US $ 63 in Chennai, India, US $ 58 in Dubai, US $ 64 in Sharjah, US $ 54 in Guangzhou, China, US$ 59 in Kuala Lumpur, and US$ 57 in Jeddah.
Sky-high landing-parking and air navigation charges
The landing-parking charges being collected from domestic and foreign airlines at Dhaka's Hazrat Shahjalal International Airport are much higher than those in other countries of the world.
The airlines inform that when a Boeing 737-800 aircraft lands in Dhaka, it costs US $ 1,540 plus 15 percent VAT, which is about Tk 222,000. However, if the same plane lands in Kuala Lumpur, Malaysia, it has to pay only Tk 15,537 in landing charges. That is, if the same plane lands in Dhaka, it has to pay Tk 207,000 more than in Malaysia. This skyrocketing charge is affecting the price of the ticket.
Bangladesh Biman charges extra for ground handling
Biman Bangladesh Airlines is the only airline that handles ground handling for all domestic and foreign airlines. After the aircraft lands at the airport, guiding them to the parking bay, installing stairs at the door, loading and unloading passengers' luggage, loading and unloading cargo, cleaning the interior of the aircraft, and serving at the check-in counter are all included in ground handling.
The charges that Biman Bangladesh Airlines charges for these services are higher than those of many countries in the world.
Biman charges a ground handling charge of US $ 2,500 or Tk 306,000 for a Boeing 738-800 model flight at Hazrat Shahjalal International Airport in Dhaka. However, the ground handling charge at Malaysian airports is only MYR 3,500 or Tk 97,545.
A large part of Biman Bangladesh Airlines' revenue comes from collecting ground handling charges. Multiple companies provide ground-handling services in most countries of the world. In that case, the charges are very competitive. However, Biman has sole dominance in ground handling in the country. They have set arbitrary ground handling charges to maintain their revenue, which is being added to the price of passengers' tickets.
