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Local airliners set to pay same rate as foreign cos

Rising fees will push up fares and leave passengers suffering, sector people say
Staff Correspondent
15 Oct 2023 21:10:18 | Update: 15 Oct 2023 21:55:08
Local airliners set to pay same rate as foreign cos

From July next year, local airlines will have to pay the same amount of rent as foreign airliners to use hangers, buildings adjacent to hangers and multipurpose buildings at the Hazrat Shahjalal International Airport (HSIA) in Dhaka.

The increased fee may push up domestic air fares, aviation sector insiders have said.

In 2021, the domestic airliners used to pay Tk 40 per sq ft for using the hanger area. It was increased to Tk 80 per sq ft recently through a gazette notification. This new price will come into effect from July 2024. Domestic airlines did not have to pay any fee until September 2021.

The civil aviation and tourism ministry in the notification said foreign airliners have been paying Tk 80 per sq ft since 2021 and they will pay this rent until further notice. For using multipurpose club building’s non-AC services, they are paying Tk 100 per sq ft and AC services Tk 120.

But from July next year, they will have to pay Tk 120 and Tk 150, respectively, and the domestic airliners will pay the same fee.

However, local airliners paid Tk 40 per sq ft from October 2021 to June 30, 2022. The rent was increased to Tk 48 from July 2022. In the current fiscal year, the fee is Tk 60 and it will be Tk 80 in the next fiscal year.

The same rent was announced for private helicopters a few months ago, which put the business in trouble.

According to sources, the height of these hangars is about 65 ft and the area is 7,000-8,000 sq ft. The monthly rent of a hangar is a major expense for airlines. The higher cost pressure from next year will increase further with this rent.

Compared to 2021, fares of domestic airliners will double. However, in the case of foreign airlines, the opportunity to pay the fare at the same rate has been maintained.

US-Bangla Airlines General Manager (Public Relations) Kamrul Islam told The Business Post that local airliners did not have to pay any rent at HSIA before 2021 as there was no hangar facility until then.

Domestic airlines have been paying the rent since it was introduced but the ministry increases this fee every year. When this pushes up the operational costs of domestic airlines, the companies are forced to pass the burden on the passengers by raising the fares, he said.

Shams Mahmud, former president of Dhaka Chamber of Commerce and Industry, told The Business Post that introducing additional fees is against the aviation sector’s development and will hamper the ease of doing business and have a negative impact on the industry.

He said if the lease of domestic airlines is determined at the same rate as foreign airliners, investors will feel discouraged from investing in the country's aviation sector.

Domestic airlines are earning foreign currencies while foreign airlines are taking them away. Domestic airlines should be given an advantage in this case, he said.

He also said that the passengers will face the impact of this decision as well. Airlines will be forced to increase fares. “A long-term policy should be adopted in this regard. Due to this sudden increase in costs, domestic airlines will face a big problem in terms of competition.”