With few flyers, airlines continue to lose money

Although flight operations have resumed on a limited scale, the aviation industry is yet to gain pace as passengers are reluctant to travel amid a surge in infections and new quarantine measures in destination countries.

For instance, after the air travel ban was lifted, Biman Bangladesh Airlines operated its first international commercial flight to London on June 21 with 70% seats full. But it returned with only 23 passengers, a load factor of less than 30% causing loss of above Tk10 lakh from its first international flight since the flight suspensions from May 17 because of the pandemic. 

This flight from Dhaka was full as most of the passengers had purchased their tickets before suspension of flight operations. 

In the domestic sector, Biman was able to operate flights for just one day before cancelling all subsequent flights because not enough people were flying. 

The cash-strapped national carrier resumed operations by taking out a loan of Tk1,000 crore in May from Sonali Bank under the Tk30,000 crore stimulus package. But operational losses of the company have been widening due to the crisis of passengers. 

Revenue losses of the company stood at around Tk400 crore until March, but it almost quadrupled to Tk1,527 crore in May, according to Biman.

This loss in revenues has also impacted the ticket fare. Biman has been charging a higher price than usual for the London route. 

"The aviation industry had started to move slowly, but quarantine measures in destination countries have discouraged passengers from travelling," said Md Mokabbir Hossain, managing director of Biman.

"As a result, we are operating flights at a loss. We do not know how long we can continue," he added.

Biman used to operate flights on 17 international routes before the Covid-19 outbreak. It is now operating only on the London route once a week.

However, it is going to resume scheduled flights in two more international destinations, Dubai and Abudhabi from 6 and 7 July respectively. 

Some other foreign airlines including – Turkish Airlines, Qatar and Emirates airways – are allowed to operate international flights from Dhaka.

However, Turkish Airlines' earlier announcement that it would restart its flights from Dhaka on Friday has been cancelled. This flight suspension will be in effect till July 7. A Turkish Airlines source says the Turkish government took the decision not to allow flights from countries where the infection rate was rising.

Though airlines are slowly restarting their flight operations in international routes, international passenger demand is still very discouraging for airlines. 

The International Air Transport Association (IATA) in a recent study says that passenger demand in May dropped 91.3% compared to May 2019. This was a mild uptick from the 94% annual decline recorded in April 2020. The improvement was driven by recovery in some domestic markets, most notably China. 

"May was not quite as terrible as April. That's about the best thing that can be said. As predicted, the first improvements in passenger demand are occurring in domestic markets. International traffic remained virtually stopped in May. We are only at the very beginning of a long and difficult recovery. And there is tremendous uncertainty about what impact a resurgence of new Covid-19 cases in key markets could have," said IATA in its press release. 

All Asia-Pacific, Middle Eastern and European carriers' May demand plunged more than  98% compared to last year, according to IATA. 

"Bangladesh is the only country to have reopened scheduled flights on the international routes when infection rates are high," said Air Vice Marshall Md Mofidur Rahman, chairman of the Civil Aviation Authority of Bangladesh (CAAB).

He said a Covid-19 negative certificate is mandatory to enter Bangladesh. But other countries do not accept these as somebody who tested negative today might test positive the next day. 

"Other countries are very restrictive and have mandated a 14-day quarantine measure. But Europe and the US are not so strict," he added.

At the moment, China is not allowing any foreign nationals to enter due to a second wave of Covid-19 outbreak in the country. India has still not resumed international flights. Although the infection rate is very low in Thailand, it still mandates 14 days of quarantine on arrival for international passengers. 

Though Bangladesh is allowing foreign nationals to enter, the rising infection rate has put the country on restricted lists of other nations. For instance, Japan and South Korea recently limited the entry of foreigners from some countries where Covid-19 infections are surging, including Bangladesh and Pakistan.

However, the International Air Transport Association (IATA) opposes the quarantine measures, saying this has stopped people from travelling altogether. 

"Imposing quarantine measures on arriving travellers keep countries in isolation and the travel and tourism sector in lockdown," the IATA said in a recent press release. 

Mandatory quarantine measures stop people from traveling, it said, adding recent public opinion research revealed that 83% of travellers would not even consider travelling if quarantine measures were imposed on them after arriving at a destination. 

"Analysis of trends during the lockdown period shows that countries imposing quarantine saw arrivals decrease by more than 90% – an outcome that is similar to countries that banned foreign arrivals," the press release reads.

The IATA said a layered approach to safety has made flying the safest way to travel while still enabling the system to function efficiently. 

"That should be an inspirational framework to guide governments in protecting their citizens from the terrible risks of both the virus and joblessness. Quarantine is a lopsided solution that protects one and absolutely fails at the other," the press release adds.

"Safely restarting the economy is a priority. That includes travel and tourism. Quarantine measures may play a role in keeping people safe, but they will also keep many unemployed. The alternative is to reduce risks through a series of measures," the IATA stated.

In the domestic front, US-Bangla Airlines has been operating flights with a 30% load factor. Despite losses, the carrier is continuing operations to get air travellers to start flying again. The carrier is also offering tickets at low prices to bring in passengers. 

"People are not travelling as there are no business activities," said Sikder Mezbahuddin Ahmed, adviser to US-Bangla. "Moreover, the rising number of infections has also kept passengers away from travelling." 

Despite this situation, US-Bangla is offering tickets at a minimum price of Tk2,500, and the carrier is continuing flight operations with all protective measures to build trust among travellers, he said. 

US-Bangla incurred losses of around Tk400 crore until June after the Covid-19 outbreak. The company sought a loan of that amount under the Tk30,000 crore stimulus package, but got only Tk16 crore. 

This amount can support the operator for just one week, Mezbahuddin added.