Biman doomed by corruption and inefficiency

Despite an increase in passengers along with inclusion of new generation aircrafts to its fleet, the national flag carrier Biman Bangladesh Airlines incurred losses last year.

The civil aviation ministry considers inefficient management as well as corruption and irregularities have contributed to this predicament of the airline.

There was evidence of corruption in the recruitment of pilots last year, sources at the ministry said. The managing director Mosaddique Ahmed had to step down because of this.

Measures have been taken against several other officials of the department and several probe committees have been looking into these issues.

A Dash-8 aircraft of the airline met with an accident in Myanmar on 8 May. No one died in the accident, but the plane was seriously damaged. Biman had to cancel 10 flights over a span of four days due to the aircraft crisis that emerged after the incident.

However, the airline is trying to manage the situation by leasing an aircraft.

According to the Biman accounts department, though the airline grossed profits in 2006 to 2008 during the caretaker government, it began incurring losses after the Awami League assumed power in 2009.
Among the six of the last nine fiscals, Biman incurred losses totally Tk 14.56 billion while it grossed profits of Tk 5.59 billion, as per official documents. This means, in nine years, its total losses amounted to about Tk nine billion.

Other than this, Biman owes Bangladesh Petroleum Corporation and the civil aviation authorities over Tk 25 billion. This state-owned institution is suffering from capital crisis. It is no longer eligible to receive fresh loans as its old ones are larger than its capital.

The Anti-Corruption Commission has sent a report to the state minister of civil aviation identifying eight sectors of Biman that were plagued by corruption. This includes aircraft purchase, leasing and maintenance, cargo and ticket sales.

Inefficient management is the main cause of Biman’s current condition, according to certain former and present senior officers of Biman. They also attribute huge irregularities and corruption to this inefficiency and observed that the airline lacked efficient management over the last 47 years.

The officials stressed the need to stop the corruption and ensure exemplary punishment for the dishonest employees.

A senior official on condition of anonymity said, “Biman requires an efficient chief executive or managing director matched by an efficient management team.”

“We have issued a circular for new recruitment,” state minister for civil aviation and tourism Md. Mahmbub Ali said, adding, “We’re trying our best to ensure good management and good governance.”

Biman sources said around 100 candidates have applied for the post of managing director already. Mosaddique Ahmed, the last managing director, was ‘forced’ to step down before his term was complete. He was accused of irregularities in the recruitment of pilots and also resorting to corruption at the overseas stations, secretary of the civil aviation ministry Md. Mohibul Haque said.

No action against corruption and irregularities

Despite recurring incidents of corruption in Biman, the authorities have taken no action.

An internal Biman audit discovered a scam involving a huge sum at the cargo sector of Hazrat Shah Jalal International Airport. A report was published in Prothom Alo on 24 July about Tk 3.6 billion being looted in ten years. A committee was formed following this, but no investigation report has been submitted.

Two Boeing 777-200ER aircrafts were leased for five years from Egypt Air in 2014. Biman was bound to pay Tk 47 million per plane every month, no matter whether these operated or not, according to the deal.

Biman was also liable to pay all maintenance costs for the planes.

It was stated in the deal that the planes were to be returned intact on completion of the term, but after a year, an engine of one of the planes was inoperative. Biman continued using the aircraft, leasing an engine from Egypt Air at $ 10,000 per month. The damaged engine was sent abroad for repairs. Before it was repaired, yet another engine was damaged. Another engine was leased from Egypt Air with the same payment.

Though the lease ended, the two aircrafts could not be returned in the condition that they was brought. For the last one year, the two aircrafts have been in Vietnam for repairs and Tk 1.2 billion has been spent for these repair.

Inquiries being conducted

The civil aviation ministry and ACC have recently formed several inquiry committees to probe into Biman’s corruption.

The director in charge of the sales and marketing department, Ashraful Alam and deputy director general, Ashraful Alam, were made OSD (officer-on-special duty) and attached to the managing director’s office. Shafiqul Islam was the country manager of Biman in UK for four years when he allegedly had misappropriated Tk 160 million in tickets sales.

Ashraful Alam was accused of blocking tickets on behalf of several travel agencies. The matter is being probed.

ACC sources said there was a list of 147 names from Biman regarding misuse of power, corruption and irregularities involving recruitment. The commission also issued a travel ban on ten persons including the immediate past MD and certain CBA leaders.

“We have started identifying the various instances of corruption,” Mahbub Ali said. “If anyone’s actions harm Biman in anyway, we won’t tolerate that,” he said, adding, “Stern action will be taken.”

Losses on the rise

According to the Biman’s income and expenditure wing, Biman Bangladesh Airlines was a profitable company between 1991-92 and 2003-2004. In 2007, it was made a public limited company. Biman also made profit during the caretaker government’s two-year regime. It plunged into losses in the five years between 2009-10 and 2013-14. It started making profit again for three more years and dipped into losses again in fiscal 2017-18.

In six out of the last nine years, Biman saw losses of Tk 14.56 billion while profits were only Tk 5.59 billion in the remaining years. However, the number of passengers has increased significantly.

In the 2016-17 fiscal, Biman carried 2.351 million passengers and made profits of Tk 477.6 million, but in the following fiscal, it shouldered losses of Tk 2.1 billion despite 11.34 per cent increase in passengers compared to the previous year. In the 2014-15 fiscal, the company made profits of Tk 2.76 billion with 2.20 million passengers.

Biman general manager (public relations) Shakil Meraj said Biman plunged into the losses last year due to the rise of fuel prices and devaluation of taka against the dollar.

Destinations drop

In 1990s, Biman used to fly 26 international routes and seven domestic ones. The number of international routes have dropped to 15.

Once Biman had an aircraft shortage and most of its planes were old, and so most of the time the flights were cancelled due to technical glitches. The crisis is over, but Biman is still afflicted by flight delays.

Officers of Biman’s flight operation wings claimed that the delays have decreased and 70-77 per cent flights leave on time.

Biman now has 13 aircraft including two Dreamliners (Boeing 787-8), four 777-300 ER, four 737-800 and three Dash-8. Two more Dreamliners are scheduled to join the Biman fleet next July and September and three Dash-8 carriers in the next year.

Though the number of new destinations are far lower than that of the number of new jets, two more new routes are on the cards. The Dhaka-Delhi flight will open on 13 May this year and Dhaka-Guangzhou is to get permission.

Debt and capital crisis

Biman has been suffering from serious capital crisis. The company no longer qualifies for loans.

According to the accounts department, Biman has taken loans of Tk 50.66 billion against its capital Tk 20.82 billion. Once the new loans are sanctioned for the new jets, the loans will rise to Tk 90 billion.

A high-up at the aviation ministry said the authorities are not serious about the matter.

They take it for granted that the government will keep the ‘white elephant’ alive with new funds.

*This report, originally published in Prothom Alo print edition, has been rewritten in English by Toriqul Islam and Nusrat Nowrin.