Home Bank & Finance Air passenger decreasing for high jet fuel price
Bank & Finance - Tourism - July 18, 2022

Air passenger decreasing for high jet fuel price

Mahfuz Emran: The price of jet fuel used in aircraft was Tk 46 per liter two years ago. Now the price per liter of the same fuel is set by the government at Tk 130. In this way, the price of jet fuel has increased by about 183 percent in the last 20 months. Airlines are struggling to meet the cost of passenger transportation.
Airlines say that two years ago, the minimum fare of the domestic route was Tk 2500 or more, now the fare has gone up to Tk 5000. Because 40 percent of the aircraft fare is determined based on the cost of jet fuel. The burden of this additional fare falls on the passengers. It reduces the number of flights and passengers on domestic routes. Because of this, the businessmen of this sector are now asking for jet fuel at a low price with subsidies.
Bangladesh Petroleum Corporation (BPC) controls the price of jet fuel in the country. And the marketing work is done by Padma Oil, a subsidiary of BPC. When asked about this, Chairman of Bangladesh Petroleum Corporation (BPC) ABM Azad told that the price of fuel oil is gradually increasing in the international market. This is especially the case with the effect of the Russia-Ukraine war. So, BPC or Padma Oil is forced to increase the price. When prices fall again in the international market, BPC will reduce. The price has been increased and decreased like this before.
Now the government subsidizes Tk 107 crore a day on octane and diesel. In response to the question whether jet fuel can be given this opportunity or not, ABM Azad said that octane and diesel are used in all types of vehicles in the country. The annual demand is 50 to 60 million metric tons. And the demand of jet fuel is only two to three lakh metric tons. So, there is no need to subsidize jet fuel. We sell this oil at the same price at which we buy it. In many cases, we sell one to one and a half rupees less than the neighboring country of Kolkata in India.
He said, now many people are saying that the price of jet fuel has increased and the fare has increased. But almost all of those who travel by plane are well-off people. The BPC chairman asked why the government would subsidize jet fuel for them.
BPC updated the new price list of jet fuel on the website of Bangladesh Petroleum Corporation (BPC) on July 9. As can be seen from this list, the price of octane and petrol has been fixed at Tk 89 per liter and Tk 86 per liter on July 24, 2016. And from the 8th of this month, jet fuel has been set at Tk 130 for domestic route flights and US$1.22 for international flights.
This oil is sold at Hazrat Shahjalal International Airport in Dhaka and Shah Amanat Airport in Chittagong.
BPC and Padma Oil Company officials said that last January, the price of jet fuel per liter was Tk 73. On February 9, due to increase in prices in the international market, it was increased by Tk 7. On March 8, BPC decided to raise the price from Tk 80 to Tk 87 per litre.
Later, on April 7, the liter was again increased by Tk 13. A month later, BPC increased the price of jet fuel by Tk 6 per liter. A month after that i.e. last June 10, the price of jet fuel was increased by Tk 5 to Tk 111. Finally, on July 8, the authorities increased another Tk 19. Since that day, the airlines have been buying oil at Tk 130.
Air fares increasing
Biman Bangladesh Airlines, US Bangla Airlines and NovoAir have claimed that they are struggling to meet the cost of operating domestic flights after increasing the price of jet fuel every two months.
According to the companies, now they operate regular flights to Cox’s Bazar, Chittagong, Sylhet, Barisal, Syedpur, Rajshahi. But fares on these routes have more than doubled due to increase in jet fuel prices. This pressure is falling on the passengers. It reduces the number of passengers by air. Tourist areas are also not getting enough passengers. If this continues, the country’s tourism sector will also lag behind.
Two new airlines namely Fly Dhaka and Air Astra are preparing to transport passengers on domestic routes. But at the rate at which the price of jet fuel is increasing, it will be difficult for the airlines to survive, the stakeholders think.
It was found that before the corona epidemic, when the price of jet fuel was Tk 46 per liter, the lowest fare on the Dhaka-Jeshore route was Tk 2,700. It has now increased to Tk 4,800. Similarly, the lowest fare on the Dhaka-Cox’s Bazar route was Tk 3,700 which is now Tk 5,800. Dhaka-Sayedpur fare has increased from Tk 2,700 to Tk 4,800. Chittagong, Sylhet, Rajshahi rent is minimum Tk 5,000.
Chittagong, Sylhet, Rajshahi rent is minimum Tk 5,000. Before Corona, which was Tk 2,700. Now preparations are underway to increase this rent further. On July 12, General Manager (Public Relations) of US-Bangla Airlines gave a statement titled ‘Who is controlling the country’s airlines business?’ Kamrul Islam. In that statement, he said, Bangladesh Petroleum Corporation is destabilizing the aviation business of Bangladesh by increasing the price of jet fuel every month.
Everyone concerned about the future of the aviation business is terrified. Investors are passing the time amid uncertainty about the future of the business. So, the government should reduce the price of jet fuel and further subsidize the sector by reducing VAT.
Director General (Public Relations) of Biman Bangladesh Airlines TaheraKhandkar said that everything depends on the price of jet fuel, including the flight fare. However, he also said that he does not know the details about this.

Check Also

Landowners demand compensation before demolition of structures in Mugda

Staff Correspondent: The landowners along both sides of Mugda Main Road are urging authori…