High surcharges clipping airlines’ wings

Different airlines of the country are struggling to survive due to the sky-high surcharge rate imposed by Civil Aviation Authority of Bangladesh (CAAB), according to the country's private airline operators.

In a letter sent to State Minister for Civil Aviation M Mahbub Ali on Sunday, Aviation Operators Association of Bangladesh (AOAB) -- a platform for the country's privately-owned airline operators -- has demanded that the government fix a reasonable surcharge rate.

The letter said four airlines (both in operation and defunct) owe CAAB Tk 5,322 crore. The amount includes surcharge and landing, air navigation, and embarkation fees.

AOAB said a compound surcharge is in place for them, with a monthly rate of six percent, or annual rate of 72 percent, on the various arrears.

Of the total arrear, the original amount of debt is Tk 1,170 crore, while the remaining Tk 4,152 crore is due to surcharge imposed on the debt, it said.

In the letter signed by Mofizur Rahman, secretary general of AOAB, they urged the government to reduce the annual surcharge from 72 percent to 12 percent to help keep airlines afloat.

Currently, if any airline fails to pay charges to CAAB on time, it has to pay an additional 72 percent surcharge per year, which is up to 83 percent higher than neighbouring India, said Mofizur, also managing director of private air operator Novoair.

Sources at different airlines said many airlines are unable to pay their dues because of accumulated surcharge, and many even went bankrupt due to the huge debts.

At present, three airlines are operating in Bangladesh: the national flag carrier

Biman Bangladesh Airlines, Novoair, and US-Bangla Airlines.

AOAB said the total amount Biman owes CAAB is Tk 4,315.11 crore. Of this, the main amount is Tk 920.16 crore, and the remaining Tk 3,394.94 crore are surcharge and other charges.

The now defunct GMG Airlines owes CAAB Tk 368.29 crore. The main amount is Tk 56.98 crore, and Tk 311.30 crore are surcharge and other charges.

United Airways, which has ceased operation, owes CAAB Tk 355.37 crore, Tk 56.88 crore being the main amount, and remaining Tk 298.49 crore being surcharge and other charges.

Regent Air, also defunct, owes Tk 283.38 crore. Of this, the main amount is Tk 136.18 crore, while the remaining Tk 147.20 crore are surcharge and other charges.

The letter did not mention the total amount owed by Novoair and US-Bangla.

Talking to The Daily Star, Mofizur said, "In 1991, CAAB issued a circular, fixing the high rate of surcharge. We have been urging the regulatory authority to reduce the rate for many years, but nobody paid heed to our request to save the industry."

"The country's aviation sector will not develop if the surcharge rate is not reduced," he said.

Insiders in the sector said due to the high surcharge rate, airlines can do nothing but go under once they fall into the cycle of debt. The letter cited the three defunct airlines as vivid examples.

They said there are rules in many countries that airlines will pay their dues with surcharge. But the rate in Bangladesh is much higher than in many other countries.

For example, Mofizur said, the annual surcharge in Bangladesh is 72 percent, while in India the rate is 12 to 18 percent, in Singapore, it is eight percent, in Oman 10 percent, and in Pakistan two percent.

Contacted yesterday, State Minister for Civil Aviation M Mahbub Ali said, "The finance ministry is also involved in the matter. We will sit down with all the parties concerned soon and try to come up with a positive solution."