The International Air Transport Association (IATA) has raised concerns over Bangladesh's mounting dues to international airlines, prompting a surge in airfares for passengers and sparking widespread inconvenience.
As Bangladesh owes an outstanding $323 million to them, international airlines have escalated fares by up to 30 per cent and that has amplified financial strain on travellers.
In a letter sent on April 18, Singapore-based IATA sent a stern message to Bangladesh Bank (BB) Governor Abdur Rouf Talukder, emphasising the urgent need to settle the substantial debt.
Highlighting the violation of international aviation agreements, IATA also cautioned against the repercussions of delayed payments on the airline industry's financial stability.
IATA Vice President for Asia Pacific Region Philip Goh said that Bangladesh and Pakistan collectively owe over $720 million to international airlines, with Bangladesh's share constituting the second-highest outstanding amount.
Despite attempts to engage with Civil Aviation Authority of Bangladesh (CAAB) Chairman Air Vice Marshal M Mafidur Rahman, outreach efforts have remained fruitless and that has exacerbated the impasse, Goh said.
He underscored the criticality of timely payments, stressing their role in facilitating essential airline functions such as lease agreements, spare parts purchases, and overflight fees. The prolonged delay not only breaches bilateral agreements but also exposes airlines to exchange rate risks, further complicating financial matters.
IATA, which represents 300 airlines worldwide and oversees 84 per cent of global air passenger traffic, plays a pivotal role in setting standards and policies for air travel operations. Its intervention underscores the severity of the situation and the imperative of prompt resolution to safeguard the interests of passengers and airlines alike.
The Association of Travel Agents of Bangladesh (ATAB) has attributed the surge in outstanding dues over the past year and a half to Bangladesh's economic challenges, including the US dollar crisis and rising inflationary pressures, exacerbating financial strain on airlines.
The IATA letter delineated the magnitude of the outstanding dues, including Bangladesh’s $323 million and Pakistan's $399 million debt. The association urged the governments of both countries to adhere to international treaties and obligations to enable airlines to continue their operations smoothly.
Enhanced attention
As Bangladesh grapples with payment challenges due to the dollar crisis, IATA has advocated for enhanced attention from BB to address the aviation sector concerns.
In parallel, it has urged Pakistan to streamline fund repatriation processes to expedite debt clearance and alleviate unnecessary delays.
Recognising the complexities involved, Goh emphasised the paramount importance of timely and effective debt repayment to sustain air connectivity, spur economic growth and foster foreign investment and exports. The looming threat posed by substantial outstanding dues necessitates urgent action to avert further disruptions in the aviation ecosystem.
Shedding light on the genesis of the debt and its implications for Bangladesh, ATAB Secretary General Abdul Salam Aref underscored the systemic challenges that are hindering timely fund repatriation.
The prolonged delay in approving funds by BB has contributed to the accumulation of significant debt, exacerbating financial strain on airlines and passengers alike, he said.
Saying the cascading effects of escalating dues are palpable in rising ticket prices, Aref highlighted the stark disparity in ticket prices between Bangladesh and neighbouring countries and attributed it to the lingering effects of outstanding dues and currency fluctuations.
In light of the burgeoning crisis, concerted efforts from stakeholders have become imperative to expedite debt clearance, mitigate financial risks, and ensure uninterrupted air connectivity for travellers, he told The Business Post.
The urgency of the situation warrants collaborative action to alleviate the burden on passengers and restore stability in the aviation sector, Aref stressed.
