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The CAAB's repeated efforts to recover hefty outstanding payments from six airlines have not yielded any success
Published : 27 Jan 2025, 03:51 AM
Six domestic airlines, including three that shut down operations a few years ago, owe the Civil Aviation Authority of Bangladesh, or CAAB, a staggering Tk 77.22 billion, with flag carrier Biman Bangladesh Airlines alone accounting for Tk 63.27 billion of the debt.
The state-owned authority has failed to recover the outstanding dues despite making multiple efforts.
It has now decided to withhold licence renewals for airlines that fail to clear their dues.
CAAB Chairman Air Vice Marshal Monjur Kabir Bhuiyan told bdnews24.com, "We will certainly apply pressure to recover the debts. The decision to deny licence renewal is not a warning. If the dues remain unpaid, we will take legal action.
“However, we also do not want any airline to cease operations. We want them to continue services."
The outstanding amount includes airport usage fees, landing, parking, route navigation charges, as well as value-added tax, or VAT, income tax, and surcharges, which remain unpaid until November 2024 and are increasing each month.
Failure to pay on time has resulted in heavy surcharges, increasing the total amount owed.
Among the active airlines, the two private carriers, US-Bangla Airlines and NovoAir, also owe significant sums.
However, there is uncertainty over collecting dues from defunct airlines, including Regent Airways, United Airways, and GMG Airlines.
The CAAB is considering selling the assets of these airlines as a potential way to recover the debts.
The organisation’s chief said, “We have been in contact with each airline, sending letters and following up to recover the dues.
“Airlines, including Biman, have committed to paying in instalments.”
In December, the CAAB’s monthly coordination meeting decided to call the airlines for separate meetings to discuss the outstanding dues.
During the meeting, details of the dues owed until November 2024 were presented, and it was decided that if the dues were not cleared by then, the airlines' licence renewals would be denied.
According to CAAB data, the largest outstanding amount is owed by state-owned Biman.
The total amount has risen to Tk 63.27 billion, of which Tk 9.19 billion is the principal debt, while Tk 54.08 billion is owed as surcharges, VAT, and income tax.
US-Bangla Airlines owes Tk 1.72 billion, with Tk 1.4 billion as the principal debt, and the remaining Tk 90 million as surcharges.
In addition, the airline owes Tk 220 million in VAT and income tax.
NovoAir owes Tk 292.2 million, with Tk 220.9 million as the principal debt, Tk 30.7 million as surcharge, and Tk 40.6 million as VAT.
As per CAAB regulations, if any airline fails to pay the outstanding amount on time, it must pay an additional 72 percent surcharge on the outstanding debt each year.
However, private airlines have repeatedly demanded reductions in this surcharge.
Currently, three active airlines, along with the newly launched Air Astra, have no outstanding payments.
CAAB officials said there is still an opportunity to recover dues from active airlines. However, collecting debts from the defunct airlines poses a challenge, as they no longer operate.
Only a few abandoned aircraft remain, and even if they are auctioned, it is almost “impossible” to recover the outstanding dues.
Regent Airways, which ceased operations, owes Tk 4.07 billion. Of this, Tk 1.41 billion is the principal debt, while Tk 2.37 billion is owed as surcharges on previous debts. Additionally, VAT and income tax liabilities amount to Tk 293.1 million.
United Airways, another closed airline, owes Tk 3.88 billion, with Tk 567.6 million as the principal debt, Tk 3.27 billion as surcharges, and Tk 56.5 million in VAT and income tax.
GMG Airlines, which also ceased operations, owes Tk 3.96 billion, with Tk 565 million as the principal debt, Tk 3.38 billion as surcharges, and Tk 14.6 million in VAT and income tax.
WHAT AIRLINES ARE SAYING
Biman Bangladesh Airlines, which carries the heaviest debt burden, has long raised objections regarding the outstanding amount.
Bosra Islam, general manager of Biman’s Public Relations wing told bdnews24.com: “From what we have heard from the finance department, the surcharge the CAAB is demanding is something no national carrier in the world charges.
“This has been a point of ongoing dispute with CAAB.”
She continued, “The current debt is from before 2020. No new debts have accrued since then.
“We have been making regular payments on these. As for the older debts, Biman is clearing them, excluding the surcharge.
“We expect to settle everything by the fiscal year 2027-28.”
Attempts to contact the airlines’ Managing Director and chief Executive Officer, or CEO, Shafiqur Rahman for comments on the matter were unsuccessful.
Regarding payments, General Manager of US Bangla Airlines Public Relations wing Kamrul Islam said: "As we are operational, there is always an issue with bill payments due to nonstop flights, but we are consistently making payments.
“However, due to the high number of flights and occasional circumstances, some dues remain outstanding."
He added, “We have asked for a reduction in the surcharge, but as for the dues we owe, we are committed to clearing them regularly."
NovoAir's Managing Director Mofizur Rahman, who is also the scretary general of the Aviation Operators Association of Bangladesh, or AOAB, raised objections to the CAAB's calculations of the outstanding dues.
"There are discrepancies in the figures provided. We have raised these concerns with CAAB," he told bdnews24.com
CAAB’S PERSPECTIVE
There is little concern over the dues from active airlines, but uncertainty remains regarding the defunct carriers.
Speaking to bdnews24.com on Saturday afternoon, CAAB chief Monjur Kabir highlighted that meetings will be held with all relevant parties to discuss the recovery of dues from both operational and closed airlines.
On the airlines’ objections to the outstanding payments, he said: "Whenever we demand payment, they all raise concerns about discrepancies in the calculations. They review the figures and bring up these issues when the discussion turns to debt repayment."
The CAAB chief spoke about the possibility of recovering money from closed airlines.
"The airlines that are no longer in business are essentially bankrupt. We are trying to liquidate their assets through legal means and sell them at the best possible price.
“If we manage to secure a sale, we will proceed with that."
When asked whether selling these assets would be enough to clear such a massive debt, he said: "We are not responsible for the closure of these airlines.”
“Our responsibility is to support airlines wishing to resume operations within the confines of the law, and to ensure the aviation sector progresses," he added.
[Writing in English by Sheikh Fariha Bristy]
