A hasty decision by the board of Biman Bangladesh Airlines on wet-leasing a pair of Airbus A330s to cover its Hajj season charter requirements, despite having adequate fleet capacity, has put the national flag carrier at risk of incurring a loss of about Tk200 crore.
The signing of an agreement with Lithuania-based Heston Airlines was approved at Biman’s 276th board meeting, held on April 30.
Only eight individuals, including the board chairman, managing director and chief executive officer, three board members and three other officials of corporate planning and training of Biman, were present at the meeting.
According to insider sources, this sudden decision has resulted in intense resentment among other board members and employees at all levels.
No prior discussion
According to sources inside the Biman board, Director (corporate planning and training) Mahbub Jahan Khan last month submitted the request for proposal on wet-leasing a pair of airbuses to cover this year’s Hajj flights.
But the proposal was rejected due to the lack of a fruitful study and analysis, and since no discussions with others concerned, including the director of flight operations, had been held.
However, he again submitted the proposal agreement with Heston Airlines to the board.
Around 11 airlines had expressed their interest in providing aircraft to carry Hajj pilgrims this year, including Avico which leased aircraft from 2012-2016 and Air Asia which leased aircraft in 2017, and Biman could have carried pilgrim under its own management as well.
But the Biman planning director was in favour of Heston Airlines, which offered a block-hour facility and would cost Biman approximately $7,000 per hour.
Mahbub did not disclose the details of the terms and conditions of the deal in the meeting despite being asked for them by Biman Board Director Abdur Rouf Talukder, who is also senior secretary to the finance ministry.
Board members alleged that a syndicate had favoured Heston Airlines for the lease agreement without considering Biman’s profits.
Mahbub, a relative of the chairman of the Biman board, had made the proposal for his own benefit, they claimed.
When contacted, Director Mahbub denied the allegations and told Dhaka Tribune Biman had agreed to the contract with Heston to make a profit. But he added that the agreement had yet to be finalized.
Hajj flights under Biman’s management
According to two members of the Biman board, who wished not to be named, Biman has the capacity to operate Hajj flights under its own flight management, as it did in 2018 and 2019.
They said they were against the leasing decision and urged the Biman board as well as the Ministry of Civil Aviation and Tourism to review it.
The two board members added that they preferred other companies which offered cheaper rates.
They said Biman had made a profit of around Tk200 crore during the last Hajj season.
This year it would cost Biman Tk60 crore to operate 75 Hajj trips (90 days according to the agreement), and it would make a profit of only Tk50-60 crore.
So Biman would lose around Tk130-140 crore, said a source familiar with the matter.
Meanwhile, an insider source said the airline would actually lose around Tk200 crore if compared with last season’s earnings.
The airline had been able to arrange Hajj flights under its own management when its fleet was smaller and the number of pilgrims was higher, he said. “Why can it not do so now when it has a modern fleet and better capacity?”
The industry insider also suggested Biman operate Hajj flights under its management if it wanted to maximize profits. Aircraft operating on routes that had fewer passengers should be used for Hajj flights, he said.
Biman Board of Directors Chairman Sajjadul Hassan said the Biman chief was supposed to look into the lease issue.
Dhaka Tribune could not reach Biman CEO and Managing Director Abu Saleh Mostafa Kamal for comment.
Meanwhile, State Minister for Civil Aviation and Tourism Md Mahbub Ali said he was unaware of the matter, adding that he would talk to the Biman authorities about it.
When asked if Biman could operate Hajj flights on its own, he said if there was an opportunity to make a profit that way, there was no need for leasing.
Biman will carry 31,000 pilgrims on 75 dedicated flights this year, while the rest will fly by Saudia.
Hajj flights are likely to start on May 31.
