CIVIL AVIATION IN BANGLADESH: NOWHERE TO GO BUT UP

C O N F I D E N T I A L SECTION 01 OF 02 DHAKA 000048

SIPDIS

SIPDIS

NEW DELHI FOR FAA RANDALL FIERTZ
DEPT FOR SCA/PB AND EEB/TRA

E.O. 12958: DECL: 12/14/2017
TAGS: EAIR ECON PGOV BG
SUBJECT: CIVIL AVIATION IN BANGLADESH: NOWHERE TO GO BUT UP

Classified By: CDA a.i. Geeta Pasi for reasons 1.4 (b) and (d)


1. (U) SUMMARY: After years of little or no progress there
are signs that the civil aviation sector in Bangladesh is
attempting to climb out of its hole of poor safety and
abysmal performance. For a decade the Civil Aviation
Authority of Bangladesh (CAAB) has been under a Category Two
rating by the Federal Aviation Administration (FAA),
indicating that Bangladesh does not meet minimum aviation
safety oversight standards set forth by the International
Civil Aviation Organization (ICAO). Mismanagement associated
with Bangladesh's endemic corruption has left Biman
Bangladesh Airlines (Biman),the national flag carrier,
moribund. Both institutions however, have expressed a
commitment to improve, revealed during recent visits to Dhaka
by representatives from both the FAA and Boeing. Government
control of the sector has also started to loosen. Biman
became a public limited company (PLC) in July, albeit with
the GOB maintaining a majority stake, and a number of private
airlines have recently emerged, the first of which has now
been in operation for nine years. The challenges remain
daunting however, and if the sector is to truly recover it is
at the start of a very long and difficult journey. END
SUMMARY.


2. (SBU) In 1997 the FAA conducted a Safety Oversight Audit
of the CAAB, finding that the CAAB did not meet international
safety standards in five of eight areas. While Bangladesh's
aviation safety laws were found to be compliant, operational
standards were not being met, resulting in the FAA's
assessment of Bangladesh as a Category Two country. Category
Two status means that no operational changes, such as routing
and aircraft equipment, may be made to any civil aviation
services to the United States by Bangladeshi carriers. At
the time of the assessment Biman was operating a service to
New York's Kennedy Airport via Brussels, which it continued
to operate until it suspended the route in 2006.

FAA and CAAB meet again
--------------


3. (SBU) Randall Fiertz, the FAA's Senior Representative for
South Asia, visited Dhaka recently, marking the first
interaction since 1997 between the FAA and CAAB. In a
meeting with Fiertz and Embassy staff, CAAB Chairman Air
Commodore Sakeb Iqbal Khan Majlis presented an outline of the
eight areas in the FAA audit and the progress the CAAB has
made in each one. The Chairman then urged the FAA to send
another Safety Oversight Audit team to Dhaka, in hopes of
returning Bangladesh to Category One status (ICAO safety
compliance). Fiertz replied that there have been some
changes to the ICAO standards in the last ten years, and that
the CAAB needs to be absolutely sure of itself before
requesting a new audit. In the event that the CAAB fails
another audit there may not be an opportunity for a third
audit for many years. He suggested that the CAAB consider
requesting a Technical Review, in which the FAA would conduct
a review of the same areas as an audit, but would also
include an action plan to address any areas still found
non-compliant, in preparation for an eventual International
Safety Oversight Audit. After conferring with the Secretary
of Civil Aviation and Tourism, the CAAB Chairman agreed and
has formally requested a Technical Review in a letter to the
FAA's Manager of International Programs and Policy.

Biman struggles to survive
--------------


4. (SBU) Poor management under government control has left
national carrier Biman with enormous debt, a shortage of
skilled technical staff, a bloated non-technical workforce
and a fleet of ancient aircraft. Before recent cuts were
made to the payroll, the airline employed over 6,000 workers
- by some estimates five times the number needed, while it
suffered from a severe shortage of highly skilled technical
personnel. It has a fleet of 13 aircraft, of which only nine
are airworthy. The most modern aircraft in the fleet are
three Airbus A310s of mid-1980s vintage. The remaining
types, consisting of McDonnell-Douglas DC-10s and Fokker F28s
are well over thirty years old. The airline has been forced
to suspend roughly half of its international routes and
reduce services on those routes still in operation. Biman's
share of its home market has declined from 56% ten years ago
to about 34% today. As a result, Bangladesh suffers from a

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shortage of air passenger seats. Hajj pilgrims and the large
number of Bangladeshi
expatriates in the Middle East and Southeast Asia are
particularly affected.


5. (SBU) In July Biman became a public limited company, with
the GOB offering 49% of the airline's ownership to the
private sector. The airline's Managing Director, Dr. M.A.
Momen, has taken a more business-centered approach to running
the airline in the 18 months since he took the helm. He has
reduced the airline's work force from over 6,000 employees to
around 3,000, and he has re-opened discussions with Boeing on
the possible purchase of Boeing 777 and 787 aircraft.
Daunting challenges remain, however. Biman faces a severe
shortage of skilled technical staff as employees are easily
drawn away to airlines in the Middle East, India or Southeast
Asia, which enjoy access to much more capital. The
increasing cost of jet fuel, which is more expensive in Dhaka
than in nearby hubs, has also hit Biman hard, and it will be
years before Biman can acquire new aircraft of its own. To
maintain operations Biman will need to lease more aircraft
for several years, as the current equipment is unlikely to
remain airworthy much longer. Dr. Momen joked that he looked
forward to the day when he can use Biman's existing fleet to
open an aviation history museum.


6. (C) Dr. Momen also lamented the continued intrusion of
the government. Despite becoming a PLC, Biman is still
majority owned by the GOB and six of its eight board members
are government officials. At present Biman is facing
political pressure to resume services to the United States.
But as long as the CAAB is under Category Two, Biman would be
forced use the same inefficient and ageing aircraft, and the
same unprofitable route (Dhaka-Brussels-New York) that it
used previously, something it can ill afford to do.
Moreover, the FAA would need to agree to Biman's resumption
of service as it has been dormant for the past 16 months.

Boeing visits Bangladesh
--------------


7. (C) Embassy staff also recently met with Mr. Miguel
Santos, Boeing's London-based international sales director,
who was in Dhaka to resume discussions with Biman. Mr.
Santos described years of frustration in working in
Bangladesh, losing traction on proposed contracts with each
change of government and witnessing blatant acts of
corruption. He was intrigued by the new political situation
in the country and cautiously wondered if progress could now
be made on the proposed sale of 777 and 787 aircraft. The
director was not overly optimistic about Biman's recovery,
pointing out that the airline had barely begun to work out
the financing requirements, and stating that new planes won't
solve Biman's safety and performance problems. He confided
that Biman is his only client that he won't fly. (NOTE: Post
policy authorizes Department personnel to use alternative
carriers for official travel even if Biman offers the lowest
fare. END NOTE).

Private airlines take flight
--------------


8. (SBU) A number of new private airlines have started to
appear in the skies over Bangladesh. The largest of these,
GMG Airlines, began flying in 1998 and has grown into a
sizeable domestic and regional carrier, enjoying a much
better service reputation than Biman. The emergence of new
carriers has accelerated in the last year, with announcements
of new airlines, often backed by garment industry- or
foreign-raised capital, regularly appearing in the media.
But the survival of these airlines is by no means assured, as
they face many of the same obstacles faced by Biman. Even
comparatively healthy GMG is often forced to cancel flights
due to shortages of fuel, spare parts and qualified
personnel.
Pasi