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CAAB seeks waiver of charges to save aviation sector

  • Published at 02:46 pm May 11th, 2020
File photo of the Hazrat Shahjalal International Airport, Dhaka Dhaka Tribune

Some airlines have demanded a full or partial waiver of charges

The Civil Aviation Authority of Bangladesh (CAAB) is seeking an urgent waiver of charges, both aeronautical and non-aeronautical, to support the airlines industry from collapsing in the economic downturn caused by the Covid-19 crisis.

The Ministry of Civil Aviation and Tourism is scheduled to meet with the CAAB over the matter on Tuesday.

“We will finalize the waiver of charges and other issues after discussions with CAAB. Every sector is getting financial support from the government. Hence, we will consider CAAB’s demands,” said State Minister for Civil Aviation Mahbub Ali.  

Civil Aviation Secretary Mohibul Haque said they  plan to waive some charges, including aeronautical and non-aeronautical charges. “I think some decisions will come in favour of  CAAB.”

The meeting will also discuss ways on how to disinfect airports when the authorities start resuming flights.

On April 25, the civil aviation authority submitted several proposals, including seeking permission to operate flights, a waiver of aviation charges on landing, parking and housing, boarding bridge fees, security charges, route navigation facility charges, overflying, reduction in fuel prices and charges for flights beyond optimized hours of operation, etc.

Proposals submitted

CAAB Chairman Air Vice Marshall M Mafidur Rahman told Dhaka Tribune that the proposals have been submitted based on local airlines’ demands and in line with international practice followed in the Covid-19 pandemic.

Local airlines have demanded a full or partial waiver of charges.

Other countries directly or indirectly support their private airlines. However, it is not possible in our country. Only the national flag carrier Biman Bangladesh Airlines gets full financial support.

However, when the government directs us, CAAB will waive  various charges as per the demands of private airlines, Mafidur said.

Civilian aviation does not get money from the government, he said. Rather CAAB earns revenue from various charges. If the charges do not exist, then there would be no revenue.

Hence, the aviation and finance ministry will jointly take a final decision on this matter.

IATA urges reconsidering VAT

The International Air Transport Association (IATA) has urged Bangladesh to reconsider the decision to impose Value Added Tax (VAT) on aeronautical services for airlines operating in the country.

A directive from Bangladesh’s National Board of Revenue (NBR) in November announced that services provided by CAAB would be subject to a VAT charge of 15%.

In FY 2009-2010, the NBR first imposed VAT on both aeronautical and non-aeronautical charges.

IATA statistics show that aviation generates $769 million towards GDP and provides 129,000 jobs at present in Bangladesh, which could rise to $2.1 billion towards GDP and 140,000 jobs by 2038.

On April 3, IATA reported that Bangladesh could see passenger demand decline by 37%, while Thailand (40%), Pakistan (40%), South Korea (40%), and Sri Lanka (44%), would face the largest impact.

US-Bangla Airlines General Manager (media) Kamrul Islam said in order to sustain and remain in competition inthe  international market, charges need to be waived for least two to five years.

However, if airlines’ are not financially supported and waivers, including fuel prices, not implemented, then the new, third terminal would fail to earn any revenue, he said.

Biman Managing Director and CEO Md Mokabbir Hossain said, despite the suspension of flights, the airport remains open and CAAB carries the cost.

Hence, the government needs to take a decision to consider a rational way to waive the charges, he said.

“We have got a loan, but only if we can operate flights will it have a positive impact,” Mokabbir added.

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