Five years ago when little known Bismillah Airlines started air cargo business chartering aircraft, people who knew a little about the business laughed at its stubborn foolishness. It was a new territory for the Bangladeshi business houses and Bismillah's entry caused a few laughters in the arena.
Nobody now laughs at Bismillah anymore. After yet another successful year when the private charter operators saw their business grow by an impressive 16.50 per cent, air cargo industry is now the latest buzz among the big industrial groups. "Everybody now wants to operate charter flight," Abdul Mannan, the Managing Director of Bismillah told the FE recently.
A soft-spoken man, Mannan foresaw air cargo as a future industry late in the 1990s, when he came to know more about the business. Once the government announced the Open Sky policy for air cargo in 1999, Mannan did not make any hesitation to put all his energy into the business.
"At that time, almost everyone discouraged me to enter the business. The business volume was so low that there was little you could make out of this trade. But I was hopeful that if the overall economic condition improves, the air cargo industry would take off. And I was vindicated. In 2003-2004, the private operators called the shot in this Tk 8.00 billion business," Mannan said.
According to Biman cargo village, the airlines and the private charter operators carried some 99,000 tons of goods between July 2003 and June 2004, an increase of over 14000 tons than the previous fiscal.
The growth owes largely to the big expansion of business by the private operators, who came from nowhere to stake a claim as an up and coming industry. There are now as many as ten private operators with Bismillah the dominating players. Bismillah aside, Best Aviation, Z Airlines, Alitalia, South East and freight forwarders like Kuhne and Nagel and Wings Logistics also earned a big slice of the pie.
These operators, led by now-experienced Bismillah Airlines, carried around 24,000 tons ion 2003-2004, a huge improvement from the 2002-2003 fiscal's figure of 11,500 tons. In the first five months, the trend remains robust, Biman sources said.
Biman officials said despite huge demand they could not improve their carriage figure due to the lack of space in its aircraft. Biman, which once used to carry more than 60 per cent of the goods, carried only 28419 tons in 2003-4, a barely 200 tons up from the previous fiscal.
The 16 other foreign airlines have the same story to tell. Lack of space in the flights saw stagnation of their business. They had a very good business in 2002-2003, but last fiscal they carried 46,898 tons, which is fractionally up from that of the previous year. Big operators like Saudia and Emirates added more cargo flights in 2002-03, but failed to continue the trend last year.
"We have carried the maximum. If we want to increase our tally, we have to have more aircraft to our fleet," a Saudia official told FE. There is a huge demand for our cargo space, but we can't increase our fleet unless we get permission from the Civil Aviation Authority."
Mannan and his cohorts claimed that the private operators would dictate the market in the coming years because they have already earned trust from the clients.
"It's nothing unusual that the private operators enjoyed more than 100 per cent growth in 2003-2004. We offer both flexibility and good price. Naturally, the exporters find us suitable for their business," Mannan said.
"Coming from nowhere even a half a decade ago, air cargo industry is now worth Tk 8.00 billion to Tk 10.00 billion. And the profit margin is very good if you can know how to operate the tricky business," said an official of a private airlines. "This time last year the private operators used to operate seven flights a week. Now we operate ten."
Commenting on the huge growth of the private operators, Biman officials said since the private charter aircraft operators do not have to pay royalty and enjoy a number of benefits from the Civil Aviation Authority, they can offer better price to the willing shippers.
"Besides, these airlines lease aircraft at a cheap rate and then operate them at the most convenient time, especially during the peak season, to maximise their profit," Mosaddeq Hossain, General Manager of Biman Cargo Village argued.
"Biman and other foreign aircraft don't have this kind of flexibility. As a result, it has become difficult for us to grow as rapidly as the private operators."
Experts further said failure to ship garments export order lead to the growth in air cargo industry. Any garment industry that failed to ship its products in time, usually book airspace so that they can meet the shipping deadline.
Vegetables, fruits, life crabs and some essential items also are being carried in increasing amount these days. Millions of Bangladeshis living in England, US, Europe and Middle East are the main clients. The more purchasing power they have, the bigger is the growth back home.
Fariduddin, President of the Bangladesh Vegetables, Fruits and Allied products exporters association, claimed that they alone export vegetables worth more than Tk 5.00 billion via air freighters last year.
Farid complained that the charter operators are not sympathetic to the exporters' cause. "We've been their biggest clients, yet they very often impose surcharge and increase freight showing total disregard to the exporters," he said, adding the government should have a proper policy to regulate the sector.
Operators, however, disagreed with the exporters' view saying that their impressive growth alone proves that the air freighters are doing business in a ethical manner.
"Everyone knows that it is a new industry. So, our aim is to nurture it into a good shape. Until that happens, no operators will take any move which can jeopardise the growth of the industry," Mannan said with an air of assurance.