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Dhaka airport covers losses of five domestic airports
27 March, 2023, 12:35 pm
Last modified: 27 March, 2023, 02:10 pm
The domestic airports in Bangladesh are heavily reliant on the income generated by the Hazrat Shahjalal International Airport in Dhaka.
Of the eight airports that are currently operational, three are designated as international, while the remaining five operate exclusively domestic flights.
According to the Civil Aviation Authority of Bangladesh (CAAB) data, the organisation earned around Tk1,911 crore in the fiscal year 2021-22 mostly by operating these airports while it spent around Tk960 crore to maintain and operate these facilities.
Of the total revenue Tk1,597 crore was generated by the Shahjalal International Airport, the largest and busiest airport in the country. Other seven airports were able to generate only Tk314 crore in revenue, which is a relatively small amount compared to what the Dhaka airport generated.
The authority expects the income of Dhaka airport to further surge with the inauguration of the third terminal within this year.
Though the existing domestic airports are not profitable, the civil aviation and tourism ministry is considering the reopening of six closed airports gradually in response to "public interest" and to meet the growing demand of air travel.
"The airports [domestic] do not generate enough revenue to meet the operational cost. More activities are needed to generate revenue," Air Vice Marshal M Mafidur Rahman, chairman of CAAB, told The Business Standard.
"Basically, we are operating these in public interest. Similarly in future if the government decides to open the closed airports, we will do so with subsidies," he added.
Explaining the earnings source of an airport, the CAAB chairman said, there are two types of income at an airport – aeronautical and non-aeronautical.
"The non-aeronautical sector of domestic airports has little income. There are few shops inside the airports. The infrastructures are not that big," he said.
Air Vice Marshal M Mafidur Rahman pointed out another problem which is the organogram of the airports have not taken the manpower required into account.
"As a result, we have to make additional expenses for additional manpower. For example, we have to outsource the manpower on the engineering and operational sides. Whereas, there is not earning from these areas," he said.
"Shahjalal International Airport generates the major portion of the earnings, with which we are managing the domestic airports in the public interest," added the CAAB chairman.
Two other international airports – Shah Amanat International Airport, Chattogram and Osmani International Airport, Sylhet – are also profit making establishments though in a small range.
Currently, domestic airports in Cox's Bazar, Rajshahi, Jashore, Saidpur and Barisal are operational.
As part of the government's capacity building efforts at the airports to boost earning, steps to transform the Cox's Bazar airport into an international airport are underway.
The process of converting Saidpur Airport into an international setup is currently suspended due to the financial situation despite starting the land acquisition process, according to CAAB sources.
Civil aviation authorities believe that increasing flights will help boost the revenue of the airports.
"Revenue will increase if the number of passengers significantly increases. When the airport charges go up, the revenue will definitely increase. It will eventually happen in the near future, eying which airport expansions are going on," said the CAAB chairman.
As the income trend is currently upward, authorities expect the income to increase in the near future with improved management and increased number of aircraft and passengers.
Meanwhile, beyond revenue generation, airports also play a role in connectivity and economic growth, according to the airliners.
So even if there is a revenue loss, those invisible profits have to be taken into consideration. That's why they demand to reopen other closed airports in the country.
"When an airport opens, new connectivity spurs economic development. Employment opportunities are created. Therefore, these issues are also calculated outside of revenue earning by the government," said Md Kamrul Islam, general manager (marketing support and public relations) of US-Bangla Airlines.
Six out of the eleven domestic airports in Bangladesh are not in commercial operation due to insufficient infrastructure for accommodating takeoffs and landings of aeroplanes.
However, the airliners want the reopening of Ishwardi Airport and Shamshernagar Airport in Sylhet recognising the growing tourist stream to the region and the establishment of several resorts.
The poor infrastructure vs passenger shortage debate is valid for Thakurgaon Airport, Bogura Airport, Lalmonirhat Airport, Cumilla Airport and Shamshernagar Airport which have been closed for many years.
Most of the domestic airfields were constructed during the British era and saw commercial operation during the Pakistan period.
Emphasising the reopening of these airports, aviation expert Wing Commander (retired) ATM Nazrul Islam, said, "In 1991, the number of passengers on the domestic route was three lakh, which reached to 25 lakh in 2019. On international routes, the number increased from 11 lakh to 86 lakh."
He added that in 1999, around 70,000 tonnes of cargo was transported by air and in 2019 it reached to 3.58 lakh tonnes.
How Dhaka airport supports others
In the last five years (FY18-22), Dhaka airport made profit of Tk1,093.65 crore, Tk1,117.27 crore, Tk879.34 crore, Tk598.77 crore and Tk1,193.72 crore respectively.
Based on the income of the Dhaka airport alone, the CAAB has become a revenue supporting organisation for the government.
"The Shahjalal airport operates around 160 international and 170 domestic flights every day other than many cargo flights," Wing Commander Kamrul Islam, executive director of Dhaka Airport told The Business Standard.
Besides, there are a number of general aviation helicopters. Altogether, on average 350 flights are operated at the Dhaka airport per day.
On-average some 30,000 passengers use the airport. Then, there are cargo flights that carry hundreds of tonnes of goods.
"Our annual income is self-sustaining and playing the biggest role in the country's civil aviation income," said the airport's executive director.
The third terminal will boost income, he said, adding, "The number of flights will increase. So will the export-import cargos. Other facilities will also increase. Then the non-aeronautical earnings will also go up."
The money spent on building the third terminal will be paid from our income, he said.
CAAB, which constructs and maintains the airports and aerodromes, charges for relevant services including embarkation, route navigation besides various aerodrome Charges.
The embarkation fee is to be paid by departing passengers and collected by the airline at the time of ticket purchase. For international passengers the fee is Tk500 and Tk50 for domestic passengers.
Airline operators pay the aerodrome charges such as landing charges, parking and housing charges, boarding bridge fees, security charges, route navigation facility charges and charges for flights beyond notamised hours of operation.
Padma Bridge affects business at Barishal and Jashore airports
The recent inauguration of the Padma Bridge has affected the passenger's numbers in two airports – Barishal and Jashore.
"While the number of passengers has decreased at the Barisal Airport after the opening of the Padma Bridge, the operational cost remains, which means we are losing revenue," said Caab chairman M Mafidur Rahman.
An official of the Jashore airport said that the airport now operates 7 flights per day, which used to be 17 to 18 before the Padma Bridge inauguration.
The official however, said they are expecting the number of flights to increase in the coming days.
Caab wants profit sharing from ground handling
Currently, Biman Bangladesh operates ground handling in different airports and earns an average of Tk1,500 crore per year.
CAAB wants a profit sharing from this income as the airports contribute in facilitating the service.
"We do not get the civil aviation share from Biman's earnings. If we use ground handlers or if it is institutionalised that Biman will share the profit with us on every charge, then the income of the airports will increase," said the Caab chairman.
"Because civil aviation is building the airports. So the income from those who are handling the ground should be shared," he added.
On the overall civil aviation loss, he said, "We are the only organisation that has given an additional Tk600 crore to the government during the Coronavirus crisis. Even in the last fiscal year we provided an additional Tk600 crore."
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Kamran Siddiqui27 March, 2023, 12:35 pm
Last modified: 27 March, 2023, 02:10 pm
The domestic airports in Bangladesh are heavily reliant on the income generated by the Hazrat Shahjalal International Airport in Dhaka.
Of the eight airports that are currently operational, three are designated as international, while the remaining five operate exclusively domestic flights.
According to the Civil Aviation Authority of Bangladesh (CAAB) data, the organisation earned around Tk1,911 crore in the fiscal year 2021-22 mostly by operating these airports while it spent around Tk960 crore to maintain and operate these facilities.
Of the total revenue Tk1,597 crore was generated by the Shahjalal International Airport, the largest and busiest airport in the country. Other seven airports were able to generate only Tk314 crore in revenue, which is a relatively small amount compared to what the Dhaka airport generated.
The authority expects the income of Dhaka airport to further surge with the inauguration of the third terminal within this year.
Though the existing domestic airports are not profitable, the civil aviation and tourism ministry is considering the reopening of six closed airports gradually in response to "public interest" and to meet the growing demand of air travel.
"The airports [domestic] do not generate enough revenue to meet the operational cost. More activities are needed to generate revenue," Air Vice Marshal M Mafidur Rahman, chairman of CAAB, told The Business Standard.
"Basically, we are operating these in public interest. Similarly in future if the government decides to open the closed airports, we will do so with subsidies," he added.
Explaining the earnings source of an airport, the CAAB chairman said, there are two types of income at an airport – aeronautical and non-aeronautical.
"The non-aeronautical sector of domestic airports has little income. There are few shops inside the airports. The infrastructures are not that big," he said.
Air Vice Marshal M Mafidur Rahman pointed out another problem which is the organogram of the airports have not taken the manpower required into account.
"As a result, we have to make additional expenses for additional manpower. For example, we have to outsource the manpower on the engineering and operational sides. Whereas, there is not earning from these areas," he said.
"Shahjalal International Airport generates the major portion of the earnings, with which we are managing the domestic airports in the public interest," added the CAAB chairman.
Two other international airports – Shah Amanat International Airport, Chattogram and Osmani International Airport, Sylhet – are also profit making establishments though in a small range.
Currently, domestic airports in Cox's Bazar, Rajshahi, Jashore, Saidpur and Barisal are operational.
As part of the government's capacity building efforts at the airports to boost earning, steps to transform the Cox's Bazar airport into an international airport are underway.
The process of converting Saidpur Airport into an international setup is currently suspended due to the financial situation despite starting the land acquisition process, according to CAAB sources.
Civil aviation authorities believe that increasing flights will help boost the revenue of the airports.
"Revenue will increase if the number of passengers significantly increases. When the airport charges go up, the revenue will definitely increase. It will eventually happen in the near future, eying which airport expansions are going on," said the CAAB chairman.
As the income trend is currently upward, authorities expect the income to increase in the near future with improved management and increased number of aircraft and passengers.
Meanwhile, beyond revenue generation, airports also play a role in connectivity and economic growth, according to the airliners.
So even if there is a revenue loss, those invisible profits have to be taken into consideration. That's why they demand to reopen other closed airports in the country.
"When an airport opens, new connectivity spurs economic development. Employment opportunities are created. Therefore, these issues are also calculated outside of revenue earning by the government," said Md Kamrul Islam, general manager (marketing support and public relations) of US-Bangla Airlines.
Six out of the eleven domestic airports in Bangladesh are not in commercial operation due to insufficient infrastructure for accommodating takeoffs and landings of aeroplanes.
However, the airliners want the reopening of Ishwardi Airport and Shamshernagar Airport in Sylhet recognising the growing tourist stream to the region and the establishment of several resorts.
The poor infrastructure vs passenger shortage debate is valid for Thakurgaon Airport, Bogura Airport, Lalmonirhat Airport, Cumilla Airport and Shamshernagar Airport which have been closed for many years.
Most of the domestic airfields were constructed during the British era and saw commercial operation during the Pakistan period.
Emphasising the reopening of these airports, aviation expert Wing Commander (retired) ATM Nazrul Islam, said, "In 1991, the number of passengers on the domestic route was three lakh, which reached to 25 lakh in 2019. On international routes, the number increased from 11 lakh to 86 lakh."
He added that in 1999, around 70,000 tonnes of cargo was transported by air and in 2019 it reached to 3.58 lakh tonnes.
How Dhaka airport supports others
In the last five years (FY18-22), Dhaka airport made profit of Tk1,093.65 crore, Tk1,117.27 crore, Tk879.34 crore, Tk598.77 crore and Tk1,193.72 crore respectively.
Based on the income of the Dhaka airport alone, the CAAB has become a revenue supporting organisation for the government.
"The Shahjalal airport operates around 160 international and 170 domestic flights every day other than many cargo flights," Wing Commander Kamrul Islam, executive director of Dhaka Airport told The Business Standard.
Besides, there are a number of general aviation helicopters. Altogether, on average 350 flights are operated at the Dhaka airport per day.
On-average some 30,000 passengers use the airport. Then, there are cargo flights that carry hundreds of tonnes of goods.
"Our annual income is self-sustaining and playing the biggest role in the country's civil aviation income," said the airport's executive director.
The third terminal will boost income, he said, adding, "The number of flights will increase. So will the export-import cargos. Other facilities will also increase. Then the non-aeronautical earnings will also go up."
The money spent on building the third terminal will be paid from our income, he said.
CAAB, which constructs and maintains the airports and aerodromes, charges for relevant services including embarkation, route navigation besides various aerodrome Charges.
The embarkation fee is to be paid by departing passengers and collected by the airline at the time of ticket purchase. For international passengers the fee is Tk500 and Tk50 for domestic passengers.
Airline operators pay the aerodrome charges such as landing charges, parking and housing charges, boarding bridge fees, security charges, route navigation facility charges and charges for flights beyond notamised hours of operation.
Padma Bridge affects business at Barishal and Jashore airports
The recent inauguration of the Padma Bridge has affected the passenger's numbers in two airports – Barishal and Jashore.
"While the number of passengers has decreased at the Barisal Airport after the opening of the Padma Bridge, the operational cost remains, which means we are losing revenue," said Caab chairman M Mafidur Rahman.
An official of the Jashore airport said that the airport now operates 7 flights per day, which used to be 17 to 18 before the Padma Bridge inauguration.
The official however, said they are expecting the number of flights to increase in the coming days.
Caab wants profit sharing from ground handling
Currently, Biman Bangladesh operates ground handling in different airports and earns an average of Tk1,500 crore per year.
CAAB wants a profit sharing from this income as the airports contribute in facilitating the service.
"We do not get the civil aviation share from Biman's earnings. If we use ground handlers or if it is institutionalised that Biman will share the profit with us on every charge, then the income of the airports will increase," said the Caab chairman.
"Because civil aviation is building the airports. So the income from those who are handling the ground should be shared," he added.
On the overall civil aviation loss, he said, "We are the only organisation that has given an additional Tk600 crore to the government during the Coronavirus crisis. Even in the last fiscal year we provided an additional Tk600 crore."
Dhaka airport covers losses of five domestic airports
The domestic airports in Bangladesh are heavily reliant on the income generated by the Hazrat Shahjalal International Airport in Dhaka. Of the eight airports that are currently operational, three are designated as international, while the remaining five operate exclusively domestic flights...
