Airfares up, up and away 

This price shock is experienced by travellers heading to various Western destinations, such as Canada, Australia, and the United Kingdom—three prominent choices among Bangladeshis.

22 August, 2023, 10:50 pm

Last modified: 22 August, 2023, 10:54 pm

Infographics: TBS

Infographics: TBS

Infographics: TBS

As airfares continue to rise, Bangladeshi travellers are finding themselves having to shell out more than they were ready for. The surge has impacted not only migrant workers and business travellers, students pursuing education abroad have also been facing extra burden because of the price rise. 

For example, Bachchu Shekh, a Bangladeshi individual, flew to the USA with his family for studies on 28 July by Turkish Airlines. His painstaking planning for the trip was not made any easier by the Tk1.45 lakh each ticket for the Dhaka-New York route.

The total financial burden for him was the hefty sum of Tk3.65 lakh (inclusive of three tickets, one for a child). His scholarship did not include the airfare causing this additional expense.

In spite of that, Bachchu considers himself fortunate for managing the tickets on time and saving on much higher costs had he delayed. 

Sumon Ali, another student flying to the US for the fall semester, was not so lucky. He bought a Qatar Airways ticket on July 7, paying Tk2.08 lakh for an August 8 flight—a price nearly three times the pre-pandemic rates.

The mechanisms of airline ticket pricing penalises last-minute purchases with a substantial premium. For instance, acquiring an economy class Emirates Airlines ticket for a Dhaka-New York flight on August 22, destined for departure on August 30, would entail a cost exceeding Tk4 lakh. Business class tickets on average cost around Tk6 lakh on the same route.

Things were easier on the wallet two years back. Noor Hossain, presently serving as a graduate research assistant at The University of Texas Rio Grande Valley, came to the US approximately 1.5 years ago. At that time, he had paid Tk52,000 for an Emirates Airlines ticket, which he had booked about a month ahead of his flight date.

This price shock is experienced by travellers heading to various Western destinations, such as Canada, Australia, and the United Kingdom—three prominent choices among Bangladeshis. 

The abrupt surge in airfare has forced a belt tightening for less affluent Bangladeshis flying abroad, particularly to Middle Eastern countries for poorly paid jobs. Take the case of Abdul Majed, a migrant worker bound for Saudi Arabia. His transit flight through Fly Dubai from Chattogram to Madina on 22 August required a payment of around Tk60,000, up by 50% from the normal price in earlier times.

This unusual rise in airfare has forced many Bangladeshis to reconsider their travel plans. A Bangladeshi student, who has been in the USA for nearly two years, recently made a post on Facebook saying he intended to return once airfares became cheaper. 

Why this price surge

Surging demand from both students and migrant workers is causing the rise in airfare. The most notable cause for this rise is the continuing loss of value of the taka against the US dollar – from Tk85 in February last year to Tk112 now. 

Soaring demands and limited seat availability, compounded by an alleged ticket syndicate driving up prices at black-market rates, taka devaluation against the dollar, and elevated operating cost including more expensive jet fuel, contributes to this crisis.          

“The peak travel season starts from July to August and September. But the number of flights is not sufficient for the high demand. This is the main reason for high airfare,” CEO of a general sales agent (GSA) of at least six major airlines in Bangladesh told TBS wishing anonymity.

Mentioning that the cost of doing business is higher in Bangladesh than neighbouring countries, he said, “Airlines are paying more for jet fuel in Bangladesh. The supplier does not cut the price at a meaningful level if the global price falls. Besides, the ground handling cost and other taxes are too high here.”

“High competition causes decline in airfare. Had local airlines including Biman cut fares, the foreign airlines would be forced to rethink their fares,” he added.

However, Biman authorities do not agree that they are not offering a competitive price.  

“Each airline has its own business policy. The fare is fixed by considering their cost of operation, route analysis, and based on peak season-lean season. It cannot be said that Biman is charging more,” Mohammed Salahuddin, General Manager, Marketing, Biman Bangladesh Airlines told TBS.

Besides the US, Canada and the UK are two other popular destinations for Bangladeshi students.

Now Biman Bangladesh Airlines is operating flights on the Dhaka-Toronto route with 290 seat capacity twice a week and on the Sylhet-London route with 270 seats four days per week.

“We are struggling to meet the demand. We see huge demand for tickets till 15 September as this is the time for students to enrol and begin new sessions in the US and the UK,” Mohammed Salahuddin, GM, Marketing of Biman told TBS.

He claims that Biman doesn’t charge passengers extra like what other airlines do.

However, while this correspondent looked up online ticket prices for 21 September for the Dhaka-Toronto route on Biman website, the fare was quoted at Tk3 lakh in economy.  

Due to huge demand, Biman is eager to increase the number of flights on the Dhaka-Toronto route. But Canadian authority is not permitting them, he said.

Timothy Ouyang, General Manager Bangladesh, Singapore Airlines told TBS, “Singapore Airlines adopts market-based pricing strategies. Our airfares are determined by supply and demand, and therefore are dynamic and subject to change.”

“We recently announced plans to boost services across our network in the 2024 Northern Summer operating season from 31 March 2024. 

What the local airliners say

US-Bangla airlines operate flights to four Middle Eastern destinations flown by manpower passengers.   

Md Kamrul Islam, GM, US Bangla airline said, “If a passenger purchases a ticket at the last moment, the price will be high. Had he bought the ticket months ago, the price would have been lower.”                                  

Regarding jet fuel prices, he said, “The fuel prices have decreased. But we have to consider the ratio, how much the prices have actually fallen. It is now Tk100 per unit from Tk130.”

Demand Vs capacity

Currently, approximately 160 international flights land daily at Dhaka, excluding cargo operations. Each day, an average of 30,000 passengers utilise the airports, with roughly 50% constituting outbound international travellers.

The CAAB reported a notable surge in international passenger numbers, rising by 133% to 90.63 lakh in 2022 from 38.83 lakh the previous year. Local airlines claim only a quarter of the total market share, with the remaining three-quarters attributed to the 32 foreign carriers.

However, figuring out exact seat capacity is tricky due to the fluid nature of aircraft deployment, according to industry operators.

Mofizur Rahman, Secretary General of the Aviation Operators Association of Bangladesh (AOAB) and Managing Director of Novo Air, noted that total seat capacity calculations prove challenging due to frequent aircraft substitutions on the same route. This sentiment was echoed by US Bangla Airlines’ GM, Kamrul Islam, who cited varying capacities of aircraft—ranging from 350 to 180 seats—utilised to match route demands.

Aviation consultant Kazi Wahidul Alam further emphasised the intricacy of assessing total seat capacity, pointing to the practice of deploying larger aircraft in high-demand routes. He noted that while demand might surge, aircraft availability often limits the capacity adjustment ability.

Group ticket sales in black market blamed      

Allegations have also surfaced of a syndicate involving airlines and travel agents creating an artificial crisis for tickets, driving up costs, said industry insiders. Basically those who work as travel agents and manpower agents are involved in these syndicates, they said.

Abdul Salam Aref, general secretary of the Association of Travel Agents Bangladesh (Atab), stressed on the monitoring of ticket sales and marketing by airlines.

He suggested allowing more airlines to operate in the market.

What CAAB Chairman says

Air-Vice Marshal M Mafidur Rahman, chairman of the Civil Aviation Authority of Bangladesh, said airfare is high globally.

“We have been talking with the airlines about the high cost of tickets and they blame it on the fuel price hike, dollar crisis and a rise in operational costs,” he said.

He said also the number of travellers has increased significantly, but the capacity did not expand.

Replying to a query on the low-ticket price in India compared to Bangladesh, Rahman said fuel cost is lower in India than in Bangladesh as the Indian government gives subsidies.

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