'Higher cost of capital could be a cause for concern'

With the upcoming expansion of our airport's third terminal, alongside the ongoing improvements in the air traffic system, and enhancements in the refuelling system, we anticipate an increase in the number of foreign travellers. However, there's a significant chance that many of these travellers may opt for foreign airlines due to our higher cost of capital.

Without access to local financing, the cost could exceed 10%, possibly even reaching twelve or thirteen percent, in contrast to the 5-6% rates offered by Middle Eastern or Singaporean carriers. A lower cost of capital provides them with a significant advantage in terms of overall expenditure.

Another significant issue pertains to the geopolitical context. The number of flights our country's airlines can operate to any foreign destination is determined by the air service agreement established between the respective countries. This agreement also defines factors like the frequency of flights and the maximum number of passengers allowed to travel between our country and another nation in a given week, or to a specific location.

If Bangladesh aspires to expand its airline operations but faces limitations in its existing air service agreement, it must navigate a lengthy process to amend the agreement. Initially, the airline reports the issue to the Civil Aviation Authority of Bangladesh (CAAB). CAAB then forwards a proposal to the Ministry of Civil Aviation and Tourism. From there, it proceeds to the foreign ministry and is subsequently conveyed to the relevant foreign ministry abroad. This bureaucratic process can be time-consuming, during which foreign carriers may gain a significant share of the market.

Infrastructure and terminals are undoubtedly major factors, but there are several other critical elements at play. The development of maintenance facilities, refuelling capabilities, and air traffic control must all progress in tandem. If one of these components outpaces the others, it becomes challenging to attain our desired objectives.

Bangladesh currently lacks a maintenance facility for aircraft. As a result, carriers have to send their aircraft abroad for C-checks or D-checks since there is no available hangar in the country, except for Biman's. However, Biman's hangar remains occupied year-round with maintenance for its own fleet, leaving no capacity for additional work from other airlines.

As the travel market experiences a rapid post-Covid recovery, foreign airlines have already begun deploying larger aircraft on various routes. For local airlines aiming to expand their fleets, acquiring planes is just one part of the equation. Factors such as where aircraft maintenance can be conducted and whether there are an adequate number of skilled engineers available in the market also become crucial.

In Bangladesh, the only aviation training centre is BATC, and it falls short of international standards. Other training centres offer only minor courses. BATC primarily focuses on developing its own aviation resources rather than catering to industry needs. Consequently, obtaining trained aircraft engineers, technicians, and mechanics is challenging without proper training infrastructure.

The interview was taken by TBS Staff Correspondent Kamran Siddiqui.