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Published : 29 May 2024, 09:37 PM
The outgoing managing director has confirmed that Biman Bangladesh Airlines will be purchasing aircraft from Airbus - not Boeing - to expand its fleet as it aims for greater diversity and resilience.
Md Shafiul Azim, also the outgoing CEO of the flag carrier, provided a clear indication while sharing his thoughts with aviation journalists at Balaka Bhaban on his last working day Wednesday.
He cited reducing dependency on a single company, offering more choices to passengers, and increasing the airline’s 'face value' as reasons for purchasing Airbus aircraft.
He explained that the decision to purchase from Airbus was made last year.
The competition to sell aircraft to Bangladesh between American giant Boeing and European manufacturer Airbus was evident early last year. Some viewed it as a duel for control of Bangladesh's skies.
In terms of negotiations, Azim noted that they are following a transparent and thorough process without any external pressures or interventions.
He emphasised that the introduction of Airbus aircraft into their fleet would not harm their long-standing relationship with Boeing, highlighting the ongoing technical and financial support from Boeing.
Currently, 16 of the 21 aircraft in the airline's fleet are made by Boeing. Although the MD provided various reasons in favour of diversifying the fleet, the discussion also included the increased costs associated with maintaining a mixed fleet.
When asked whether the airline is buying Airbus or Boeing, the MD said, "As we gradually expand our fleet, if we do not have diversity and rely only on a single source, it would be... One thing is, having two types of aircraft allows passengers to choose. Many passengers prefer to fly on the Airbus A350. Then we can accommodate the passengers' preferences.
"Another aspect is that any company can perform poorly at any time. Then we should not be in a big trouble, we should have alternatives, we should have that strength not to become unstable. We should not be at risk in such situations, and as part of our long-term planning, we are currently negotiating with Airbus."
MD Azim said, "You will see, if we can create a nice balance between Boeing and Airbus, then the airline can stand as one of the top airlines in Asia or in the world. Our branding will increase, the face value of Biman Bangladesh Airlines will grow. This diversity will elevate us to a different height.
"And the process of purchasing from Airbus is proceeding strictly according to our policy. So, there is no chance of deviation. Whether we are technically getting a better deal, whether we are in a financially advantageous position, whether we are getting all the benefits—these considerations will determine the final decision."
Continued the MD: "We have created an opportunity among ourselves. If a healthy and beautiful competition can be established between Boeing and Airbus, we will benefit. Then why wouldn't I take this opportunity? Alongside, the offer from Boeing has also arrived, and that committee will start evaluating it by the rules.
"Now we will say that as buyers, we are in a favourable position. We will see which option is more profitable for the airline. Our choices have increased."
When asked about the current stage of the Airbus purchasing process, Azim said, "The evaluation committee has now referred it to the negotiation committee. The negotiation committee that has been formed with the approval of the Biman board will now negotiate with Airbus. Price, technical aspects, financing, training, everything will be included in this. There are some set rules for buying aircraft, they will follow that."
A committee initially rejected Airbus's proposal, then the committee was changed and within three days, the same committee gave a positive evaluation to the proposal, reported a daily in Dhaka.
When asked about this, the MD of the airline said, "There has been no change in the technical-financial committee. As the director (engineering) who was the head of this committee retired, changes had to be made.
"Initially they had given two freighter proposals. We thought it would not be right to go with that. After Airbus's first proposal was rejected, they gave a revised proposal. That proposal actually came with many better things. They (Airbus) realised that to stay in the competition, they had to offer better."
The MD added, "The highest level has repeatedly assured us that we should do what is best for the airline. There is no pressure here. We have not received any intervention. Everything is happening transparently, following all the rules."
He commented that “when you try to introduce something new outside of habit, obstacles arise”. "Introducing a new thing comes with a kind of resistance. It's natural. People are a bit afraid of change from what they are used to. But this change will bring us long-term benefits.
"Because,” said Azim, “I believe various incidents are happening in a company. If something like this happens in the future, then we have an alternative.
“Just a few days ago, it was being said that Boeing 777s must be grounded. Now if something like this comes up, then my whole fleet will be grounded. Not just Airbus, if another company comes forward in the future, we need to adapt it according to our capacity.”
He was asked whether purchasing aircraft from Airbus would damage Biman's longstanding relationship with its trusted partner, Boeing.
Azim responded by saying: “Initially, Boeing had proposed selling the 737 aircraft. You know that there have been several incidents with the 737 Max, so we cannot just rush into this.
“The evaluation of Airbus will start once it's completed. Boeing is a very trusted partner for us. Since they provide us with technical support, we regularly make installment payments for the aircraft. There is no reason for our relationship with them to deteriorate.”
He remarked that Boeing's supply chain and technical support are “very good”, adding: “We continue to work with Boeing on other matters as well. Of the four Boeing 777 aircraft that we purchased, we have already paid off the loans for two, and we may be able to pay off the remaining two this year.
"The payments are being made from Biman's own revenue. The loan facilities they provided were also excellent. Our relationship with Boeing isn't limited just to buying and selling aircraft. We are also working with them for maintenance, financing, pilot training, and other future plans.”
In March 2023, the French aircraft manufacturer Airbus came to Bangladesh with several proposals, including the sale of aircraft.
In May of that year, a joint declaration was signed in London by Salman F Rahman, the prime minister's advisor on private industry and investment, and UK's Lord Dominic Johnson, the minister of state for business and trade.
Under the joint declaration on the ‘Aviation Trade and Investment Partnership,’ it was announced by the state-run news agency BSS that the inclusion of passenger and cargo aircraft purchases from Airbus was included.
Later, during his visit to Dhaka in February of this year, French President Emmanuel Macron announced that Bangladesh had committed to purchasing 10 large aircraft from Airbus.
Azim revealed that the decision to purchase from Airbus was made last year, saying, “We had already issued a LOI (Letter of Intent) to purchase from them, in May last year. It was a long-term non-binding commitment. So, the offer is based on that. This is a single offer. Whether we will accept it or not will go through due process.”
‘GROUND HANDLING SHOULDN’T BE PRIVATISED’
Biman, in addition to operating flights, has been providing ground handling services at airports across the country. Ground handling is also a major source of revenue for the airline.
However, the government has said that the ground handling for the upcoming third terminal at Shahjalal International Airport is being assigned to a Japanese company.
Shafiul Azim has been visibly active over the past one and a half years in trying to secure this ground handling work for Biman.
Asked whether his departure might affect this momentum, the outgoing MD said: "Biman should get the ground handling for the third terminal. Many things are involved here, including our national security and prestige.
“Additionally, Biman has invested nearly Tk 11 billion in ground equipment last year. We have also revamped our training and supervision of staff.
"We are confident that no one else is in a position to match Biman's capabilities here. However, we welcome any good practices."
He added, "This is not just business. It's a strategic issue, very important for national security. In various countries, it's the national carriers that handle these operations.
“Singapore Airlines, Turkish Airlines, and Emirates do it in their countries. It wouldn't be right to hand it over to any other private company because there are many sensitivities involved.
“We handle a variety of flights, including domestic and international VIPs, which are extremely sensitive. These responsibilities should not be given to a private organisation. No one does."
There have also been questions raised about Biman's profitability in recent media reports. These reports suggest that while Biman declares itself profitable by showing earnings from ground handling, it incurs losses in flight operations.
When asked about this, Azim said: "In the last 10 years, Biman was profitable for eight years. There was a loss for one year during the COVID period and when we had to make large payments for new aircraft purchases. Even amid last year's dollar crisis, we made a profit. We're talking about profits that have been audited by internationally recognised firms, not just claims."
Azim claimed that Biman has been rated “Triple A” by “the best global credit rating company”.
"Those who understand business will know what a 'Triple A' company means. Can you show me another company in Bangladesh like us?It's because Biman is profitable that Airbus and Boeing want to do business with us.
“That's why countries like Canada and Japan want to do business with us. I can name at least 20 countries that want to do business with Biman. If the company wasn't profitable, they wouldn't come. Do they seem foolish?"
NO ‘TICKETING SYNDICATE’
The MD also addressed complaints about a 'syndicate' controlling Biman's ticket sales that have surfaced at various times.
"Often what happens is, by shouting 'the tiger has come' we create opportunities for the syndicate,” remarked Azim.
“There is no chance to manually intervene in Biman's current ticketing system. Anyone can check the status of Biman's tickets on the website.
"By May 30, the Ministry of Expatriates Welfare and Overseas Employment has to send many workers to Malaysia. We've added four additional flights alongside our regular schedule.
“Our tickets are all open. We are selling tickets for as low as Tk 70,000. But the agents buy them and charge different prices from people. Private airlines are even selling for Tk 120,000.
"Now, if agencies take tickets outside and sell them this way, what is Biman supposed to do? Tell me. We are trying to get more slots in Malaysia. As soon as we get the slots, we open the tickets.
“Bring any expert you like. If anyone can prove that there is a syndicate, I take responsibility and ensure that my people will be punished."
