Fearing losses, the national carrier backtracks from its recent decision
As fare hike on international routes proved to be a mistake for Biman Bangladesh Airlines, it backtracked within a couple of weeks slashing the increased fare on 15 of the 19 routes by almost 60 percent.
Biman’s tickets to different international destinations will cost less, but it will still be higher than it was charging a few weeks ago.
Biman had increased one-way fares between approximately Tk 712 and Tk 4,976 depending on the distance of travel.
The fare hike cost Biman almost 50 percent passenger loss in some routes causing a huge loss to the national flag carrier, Biman sources said.
Biman officials said they decided to slash 60 percent of the increased fare, which was hiked in the name of fuel surcharge, so that it can compete with other airlines that charge less than Biman.
However, there will be no reduction in fares on four short regional routes–Kolkata, New Delhi, Karachi and Kathmandu–as the fuel surcharge on those routes was less than Tk 712, officials said.
They said the decision to slash ticket prices was made following a series of meetings of the pricing committee and it will take to effect globally from tomorrow.
“We earlier increased the fuel surcharge to be consistent with the actual fuel cost. But now we have revised the decision due to its adverse effect,” Biman Managing Director Zakiul Islam told The Daily Star yesterday.
Asked how much loss Biman incurred in the couple of weeks following the raise, the Biman chief said they are yet to make an assessment.
Another top Biman official seeking anonymity said February and March is lean season for flying and this may also be the cause of fewer number of passengers.
Biman officials said after the price hike Biman suffered the most on Saudi Arabian routes, which was profitable before the fare hike. Biman used to fly to Riyadh, Zeddah and Dammam with capacity load, 344 passengers, but after the price hike the number of passengers came down to as low as 80.
The one-way fare for the three destinations in Saudi Arabia had increased the most raising the fare to Tk 28,825 from Tk 21,885. However, in the revised decision the fare has been cut by approximately Tk 2,618.
Sources said flights to Kuala Lumpur and Bangkok usually had 300 and 200 passengers but after the price hike the numbers were almost halved.
“Usually Biman operates from Riyadh with full passenger load. But, after the increase in the fare Biman was flying with 50 percent of its seat vacant,” Habibh Ullah Miazee, deputy manager (finance) at Biman’s Riyadh office, told The Daily Star over the telephone.
He said earlier they used to have trouble meeting the demand and hoped that after the price revision comes into effect, they will again get plenty of passengers.
Talking to different travel agencies, it was learnt that despite the decision to cut 60 percent of the increased fare, Biman’s fares on different routes are still higher than some competitor airlines.
Asked why passengers would fly Biman, a top Biman official seeking anonymity said apart from the fare cut, they are giving lucrative discounts on profitable routes to guest workers travelling in groups.
Sources in the travel agencies said after the fare hike, a Dhaka-Riyadh-Dhaka Biman ticket costs about Tk 44,620, on Saudia Tk 20,850, on GMG Tk 33,902, on Emirates Tk 28,629, on Jet Airways Tk 35,230, on Gulf Air Tk 35,514, on Etihad Tk 28,058 and Kuwait Airways charges Tk 24,187.
“The unjustified decision of increasing fare will cause a huge loss to Biman and it would have to bear the consequences for quite a long time,” Wahidul Alam, aviation analyst and editor of Bangladesh Monitor, a travel magazine, had said.
Criticising the decision to increase the prices in the first place, he said Biman authorities raised the fare, without thinking its consequences, to recover around Tk 80 crore loss it incurred last fiscal year. The authorities should have taken efficient cost management strategies rather than increasing the fare, he observed.