The New Nation - Internet Edition

Sheikh Monirul Islam

Although Bangladesh has not failed as a state yet, failure of its national airline is inevitable. It could have been avoided if the recent Caretaker, military backed-interim government of Dr. Fakhruddin Ahmed acted quickly and smartly. But what it did instead is that it wasted no time to make it a Pic, which was done in a kind of rush-rush, and what I came to know from my reliable sources that that too was done to facilitate the buying of new aircraft quickly in the interest of those people, the 14-member syndicate which were looting the national airline from the period of Ershad's time. So, basically it was business as usual. Only benefactor group within the airline is its group of pilots (BAPA members) which managed to strike a deal on this occasion, to raise their pay to a new higher level of US$2000.00 per month as fixed salary excluding other allowances and fringe benefit.

I started this write-up with something else in my mind, let me come back to that point. Two alarming statements came out from two very important persons in the international aviation. First the IATA CEO Glovanni Bisignani in his recent statement maintained that the global aviation industry is braced for losses of at least US$2.3 bn this year if the price of crude oil at current level of 86. The second statement came out voicing the same concern from president of the Emirates airlines Tim Clark on the devastating impact that high oil prices have on the airline industry. "If the oil goes to US$200 a barrel then we are all in trouble you won't see half of the people here next year."

Here is a worrying statistic. Every dollar on the price of crude oil means US$1.6bn in extra cost for the global aviation industry according to airline trade body IATA (Int'l Air Transport Association). That simple equation is why the world airlines have gone from forecasting 2008 consolidated profit of about US$4.5bn to losses amounting to US$2.3bn (crude oil price being at 86 at the time?). As the global airline leaders met in Istanbul last week while the regional airport industry gathered at the same time in Dubai, only one topic was up for discussion. What will the rising price of crude oil mean for aviation?

The situation has become so serious that the IATA chief told the organisation's annual general meeting that the surging price of oil represented an extraordinary crisis. Particularly when the losses currently being forecasted by IATA may almost treble to more than US$6bn if the price of crude tops US$135 for the remainder of the year. It predicts that if the oil prices remain at US$135 for the rest of the year, the losses could be as high as US$6bn, and last week IATA revised its industry financial forecast for 2008 to a loss of US$2.3bn, a swing of US$6.8bn from the previcusly forecast industry profit of US$4.5bn, which was based on an average oil price of US$86.

"The airline business is a very risky, low-margin business, so you have to spread your revenue sources'', argues Paul Griffiths, former Executive Director of the Virgin Atlantic and current CEO of Dubai Airports. When an airline like Biman that is purely basing its revenue on a fairly narrow sector of the market, then it is even more exposed to variances in that market without any cushion because of huge cutback in its revenue generating routes due to shortage of aircraft and inherent inefficiency the way it runs its business because of lack in overall professionalism in management. And, surprisingly, no action taken in this regard by Prof. Dr. Jamilur Reza Choudhury for their vested interest, although they tried to sound it otherwise!

So far I have written about what is going wrong; let's talk about hope. I wish I could ask few questions to those people who are sitting at the helm of country's aviation playing field. So far we did not see any apparent policy changes in the way business was being done in the past. The vested interested group has an easy run too in this regard. Only difference this time is pure bureaucrats were virtually given autocratic power to make business decisions having no accountability what-so-ever.

JXB (Jabel Ali Int'l Airport), the new expansion programme (phase 2), of DXB (Dubai Int'l Airport) includes the construction of terminal 3, concourse 2, concourse 3, and a mega cargo terminal, is going to be biggest airport in the world. The most striking feature of the airport design is its sheer size. The airport is planned to have six 4500m parallel runways, cover 140 square km (54 square miles) and include facilities to handle 120 million passengers and 12 million tons of cargo per year. Upon completion, it will be the world's largest by physical size. Dubai intends for Dubai World Central to pass Heathrow. O'Hare, and Atlanta in passenger metrics, but but it will initially service cargo airlines. The airport will complement Dubai International Airport, some 40 km (24 miles) away. The airport itself is surrounded by massive industries and housing.

What is of interest to us that it is going to have two (2) biggest terminals; one will be serving the southern hemisphere, other one serving the northern hemisphere. Dubai being the hub center will bring all the international passengers from rest of the world, transporting them quickly to DXB using fast train service, where long distance routes using A380 will be waiting to carry them to the rest of the world. The plan is for virtually monopolising the whole commercial airline business, which is un-stoppable because Dubai has the best aviation people in the world to run it and has the financial capability. You have to understand the financial power of the region and the dynamic leadership in the area. It is not the end of the story; to supplement it further DXB is going to have the base operation of the biggest cargo operations which will involve 200, cargo aircraft. To be precise its cargo operation will begin first, passenger operation being the next.

Let us come to the final point: Biman or for that matter, all the commercial airline operations in our country, should quickly conglomerate and plan how we can integrate ourselves to this biggest commercial airline operation at DXB, so that we can simply survive and still enjoy a very small size of that cake without risking a total collapse of our national airline industries. Although it may sound like a threat, but that is the reality and that's the future. Once again, I must finish here with a light piece of warning that it is better that we are there, or else we may not be there ever.

I suggest the government to immediately form a joint aviation commission and invesitgate all related issue once and for all to come up with a comprehensive solution to this immediate threat to our aviation-related businesses. I also suggest that the government should send a high power delegation to negotiate with UAE government and its private aviation enterprises DAE (Dubai) Aerosoace Enterprises) and Abu Dhabi's Mubadala Development Company, two huge enterprises with billions of dollars, looking into future aviation opportunities.

(The writer is a licensed aircraft engineer who has worked for 26 years with Qantas, Biman, Malaysia Airlines and Etihad Airways and has extensively worked on Boeing, McDonald Douglas and Airbus aircrafts including Rolls Royce, General Electric and Pratt & Whitney Engines.)