_By Raquib Siddiqi
Dhaka : The promise of a new era has gone out of sight_ behind ominous dark cloud of uncertainty. The operation of 40-year old Bi-man Bangla-desh Airlines Limited (Bi-man) _the national flag carrier of Bangladesh_ is now in disarray. Due to shortage of fund, shortage of aircraft as well as unreliable fleet, the national flag carrier is running on day to day basis and finding hard to keep its nose up.
Mismanagement by non-professionals and unreliable fleet have been very much 'inseparable part' of Biman since its birth. Due to lack of effort in the desired direction, the national flag carrier is still stuck in quagmire of serious basic problems_ poor management, unreliable fleet and poor manpower being the three most important.
The present situation is very much depressing in all aspects_ both financial and operational. In its struggling history, perhaps the current situation can be termed as most critical.
Biman made a small amount of profit is fiscal year 2007-08. Thereafter, it is all down slide_ loss after loss. According to reports, it is now carrying a debt burden of Tk 2,000 million.
The situation
The airline is not in a position to take delivery of aircraft under repair and replace engines, due to extreme shortage of fund. This situation is resulting in shortage of aircraft and consequent disruption of flights. Owning a fleet which is dominated by old aircraft prone to frequent technical problems, the operation of Bi-man has beco-me very much vulnerable.
The fleet of national flag carrier now consist of 13 aircraft of five types one B747, two B777-300ERs, two B737-800s, four DC-10-30s, two A310s and two F-28s. One B747 and two B737s are on lease. As of July 28, 2012 only seven of these aircraft-one B747, two B777-300ERs, two B737s, one DC-10-30 and one A310 are in operation. Two F-28 aircraft are permanently grounded and the rest are grounded with technical problems.
Now, the two new B777-300ERs have become mainstay of Biman fleet. But these cannot be properly and profitably utilised due to prevailing situation. Technical problems of DC-10-30 and A310 aircraft have become regular and frequent. To ferry stranded passengers of around 200, Biman has no option but to use 419 capacity B777-300ER aircraft. This underload operation is resulting in much higher cost and heavy loss of revenue for Biman.
The B747 in the fleet is one of the two aircraft leased for 2011 Hajj operation. After the Hajj, one was retained in the fleet to use in scheduled flight operation as temporary replacement. With higher cost of operation in addition to lease payment, operation of this aircraft is draining revenue of Biman.
Biman has withdrawn operation from most of the domestic routes_ six in all_ on ground of heavy loss. There is also no suitable aircraft following grounding of all the two F-28s. It is now operating only on two feeder routes, Dhaka-Sylhet and Dhaka-Chittagong using Boeing B737 aircraft. The operation of B737 on very short domestic routes is considered as commercially unviable. At present the number of international destinations of Biman is 19.
Five types of aircraft in the fleet also making crew-both cockpit and cabin-composition different and operation cost higher.
Low product value
For quite some time, the schedule regularity of Biman is very poor. According to a senior executive, it is hovering around only about 20 per cent. A pathetic situation indeed.
The flight disruption has become so frequent that reliability of Biman has gone down to almost zero. Its existing bad image has taken further hit. Except in two B777-300ERs Biman cannot offer reliable as well as quality services. The airline is also not in a position to offer more frequency.
At its own home base, Biman is facing highly uneven competition from almost all the other airlines including low cost ones, operating in Bangladesh market. With modern equipment, these airlines are offering reliable flights, better services and more frequencies to different destinations. Compared to the products being offered by foreign airlines, value of Biman's product is considerably low.
No immediate solution
With delivery date of 3rd and 4th B777-330ERs shifted to April 2014 instead of September 2013, there is no immediate solution to the fleet problem in slight. Biman failed to make pre-delivery payment of US$ 114 million for 3rd and 4th B777-300ER, so Boeing shifted the delivery by date by about six months.
Under the circumstances, Biman has no alternative but to continue operate highly technically unsound DC-10-30 aircraft up to April 2014, though there was a decision to phase out the aircraft by September 30, 2007 due to frequent break down and increasing maintenance cost and leases B777 as replacement till delivery of the aircraft under order. The failure to replace DC-10-30s by B777s or suitable aircraft is primarily responsible creation of current critical situation for Biman.
This failure also resulted in failure of Biman to restore all the suspended destinations, consolidate flight operation and expand.
What has gone wrong?
Not very long ago, Biman envisaged a bright new era with new fleet, new brand image and identity and new management. After turning Biman into Public Limited Company (PLC), during the rule of immediate past Care Taker Government, the first Board of Directors of Biman ordered 10 aircraft_ four Dreamliner B787s, four B777-200ERs and two B737s with option for equal number of aircraft, for modernisation of Biman fleet.
Efforts to attract foreign assistance to re-structure the carrier and to recast management, to run the airline professionally, efficiently and commercially were made. The objective was to take Biman into a new era with new generation fleet, new corporate identity including a totally redesigned aircraft livery and company logo, to revitalise the brand image better as well as to reflect Biman's future direction.
Following induction of elected government in 2009, the Board of Directors was totally recast with new chairman and members. It is unfortunate that earlier efforts to provide-- new identity, induct professional management and infuse skilled manpower-- to make Biman a modern and efficient airline were abandoned. Thus the bright prospect of the new eras dimmed considerably.
Great set-back
Biman Bangladesh Airlines Limited got new look in 2010 through new logo and livery, as part of branding. To the joy and delight of all concerned, Biman Bangladesh Airlines Limited took the first step towards a 'New Era' with the unveiling of new logo and livery_ the essential new corporate identity on February 3, 2010.
But the joy was short lived, as the progress hit a stumbling block and decision concerning new logo and livery was overturned in April. A sudden unexpected and unexplained decision of the government is the cause and the old logo and livery was reinstated.
No professional management
To have a fully productive new start professional management is key and vital for Biman. The re-structuring and induction of professional management became very essential to accomplish comprehensive programmes for the development of services and enhancement of standards both on the ground and in the air. But, unfortunately, the efforts that were made to find experienced international operator to assist in getting professional management as well as re-structuring Biman to make it more dynamic, more flexible with rapid response to market demands and customers' needs, stopped after change of government.
Instead, the management that Biman got turned out to be totally unsuited compared to its need. Industry insiders consider that current Biman management, installed in 2009 is the weakest in its history. Poor management and inadequate unreliable fleet resulted in inefficiency and negative image and the airline failed.
One of the major objectives of turning Biman into a PLC was to free the administration from interference of the Ministry of Civil Aviation and Tourism (MOCAT). MOCAT was replaced by the Board. The Board of Directors, responsible for framing policies, is also involved in execution of those policies. As a result conflict of interest has become regular feature in Biman management. In most cases, the executive directors of the airline have no say.
According to allegation of senior Biman insiders, no member of the present board has commercial aviation background and their understanding of the running of an airline is also very poor.
They cited two instances in support of their claim. In the airline industry it is maintained that more frequency on any route is one of the aspect to attract passengers. Because, frequency provides passengers more options. It is said that "one flight is no flight and two flights is ferry flight". It means, more the frequency, the better the operation. But Biman board is in favour of reducing frequency and employing higher capacity aircraft instead_ to reduce cost of operation, a senior Biman official said. The board rejected a proposal to open Dhaka-Colombo route to better utilise B737-800 aircraft, on the ground there is no expatriate workers movement on the route. The operation of Mihin Lanka airline on the route and its frequency increase prove that decision of the board generated from lack of knowledge about composition of airline traffic.
Being an entity having no commercial aviation background and proper understanding, the board selected a CEO and MD who was equally novice about commercial aviation. It was the time when Biman needed professional leadership with vision and drive.
Poor manpower
The efficiency and skill level of critical workforce are now also below par. In service industries like airline, people are the greatest asset. But Biman Bangladesh Airlines is suffering from shortage of properly skilled efficient manpower at all levels. In the absence of direct officer level recruitment, the middle management positions are presently manned mostly by promotes. As a result quality of supervision has nose-dived.
It may be noted that because of the opposition of the unions, in nearly 40 years history of Biman only about 40 officers in four batches could be recruited. The present vacuum in management is because of that.
Huge investment
Biman has made huge investment in new aircraft. With modern aircraft joining the fleet, skilled and efficient workforce is needed to ensure quality services, efficiency and profitability. But situation is alarming. The need is immediate corrective action to save the national flag carrier from fatal damage. There is no alternative but to immediately infusion of new blood and intensive training programme to elevate level of efficiency and improve standard of services.
After long wait, the carrier got delivery of two ultra-modern new aircraft-B777-200ERs--part of the 10 new generation Boeing aircraft on order-- prior to its 40th birth anniversary. More aircraft are scheduled to be delivered in coming years. With the aircraft, more liability in the form of loan payment will also be on Biman.
With the delivery of new aircraft in near future, the problem of unreliable fleet is expected to go and product value is also likely to be enhanced. But unless poor management and poor manpower are replaced, the existing set up will surely ruin the opportunity.
Immediate action
There was little time to waste in addressing the problems. It is widely being felt, otherwise, the huge investment in fleet modernisation will go waste
To survive till delivery of all the new aircraft and bring operation on track, Biman immediately needs infusion of fund and induction of professional management.
An effort is underway to appoint expatriate professional as CEO and MD. Eight applicants have been shortlisted for the purpose. But a senior Biman executive said "one expatriate CEO and MD will not do. We need to fill-up key positions from outside to run Biman efficiently."
The management has also asked a bailout fund of Taka 1,000 crore from the government to help Biman to meet the crisis. It is learnt, the government in response asked Biman to submit the"recovery plan".SOURCE:
Bangladesh Monitor
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