Dollar-crisis: Standstill in payments to foreign airlines, shipping cos

Businesses of foreign airlines and shipping companies have hit a snag in Bangladesh as an outward remittance of Tk 42 billion has been stuck here due to the ongoing dollar crisis. They could not get the payments cleared despite their desperate attempts. 

Besides, outbound passengers are paying a higher price for tickets due to the dollar crisis and a heavy outflow.   

According to Hazrat Shahjalal International Airport sources, at least 20 foreign airlines operate about 80 flights from the airport. They, in most cases, sell tickets through their local agents (general sales agents or GSA).

After deducting a certain amount as a commission, the local agents send the money to the airlines through the banking channels. But the process came to a standstill as the agents failed to send the ticket prices to the foreign airlines in the last 11 months. 

The arrears to the airlines companies now stands at Tk 22 billion (USD 208 million) and the agents have literally no idea when the banks will clear the payments. The International Air Transport Association (IATA), a global platform of airlines companies, mentioned the adverse circumstances in its report for December.

The scenario is quite similar when it comes to commodity transportation through foreign ships. 

According to Bangladesh Shipping Agents Association (BSAA), a total of 30 local agents were engaged in export and import business through nearly 100 ships. The number of ships came down to 60 to 70 due to waning imports. 

Here, the shipping charges are paid in two ways – payment before shipping and payment via the local agents. 

According to the civil aviation authority (CAAB), the local and foreign airlines have carried a total of 3.88 million passengers in 2021 and the number almost doubled in the following year. The number of passengers reached 5.88 million in only eight months of 2022. It may rise further in the current year due to increased manpower exports.   

Meanwhile, the fuel prices and dollar exchange rates jumped significantly. Later, Turkish, Singapore and Malindo Air reduced the number of flights from Bangladesh.

All these issues have pushed up the ticket price by a big margin. Even short distances, like Dhaka to Singapore and Bangkok, now cost almost double to travel. According to an agent, Thai Airways used to charge Tk 45,000 for a ticket in September and October, but it now costs more than Tk 70,000. 

One who recently travelled on Turkish Airlines told Prothom Alo that he used to purchase a round trip ticket to the United States at TK 80,000 in 2019. A one-way ticket would cost then Tk 60,000. 

But the round-trip ticket now costs Tk 289,000, he said. 

Mazharul Haque Bhuiyan, former secretary general of the association of travel agents, Bangladesh (ATAB), told Prothom Alo that foreign airlines will naturally reduce flights and increase ticket prices if they do not receive outward remittances. If it continues, some will not get tickets despite having visas.

Aviation expert Kazi Wahidul Alam said, “I heard that many airlines have reduced the number of flights due to (non-payment of) outward remittances. If the demand rises, the ticket price will naturally increase.”

Insiders said low imports led to a suspension of rented ship operations here. The traders now run only their own ships and it has eventually reduced the number of export-import vessels.  

BSAA senior vice chairman Syed Iqbal Ali said around USD 200 million has been stuck and there is no certain timeframe for clearing the payments. It created fear among the shipowners whether the Bangladesh economy is going to embrace the fate of Sri Lanka.   

According to traders, the shipowners are no longer transporting goods on a prepaid basis, rather they are taking the shipping charge from the destination countries. 

It is eventually affecting the exporters as there was a scope for them in the prepaid system to bargain with the local agents on the shipping charge. But they are now paying a higher charge. 

Mezbaul Haque, executive director and spokesperson of Bangladesh Bank, said he is unaware of the issue. The central bank will take necessary steps if it is reported in this regard.