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The price of jet fuel shot up again last week, the 13th hike in 17 months, which will force domestic carriers to raise airfares, risking losing travellers and intense competition with foreign airlines.
The move from the Bangladesh Petroleum Corporation (BPC) comes at a time when the airline industry is struggling to just get back on their feet with the normalisation of air travel following the removal of restrictions to curb the spread of the pandemic.
Aviation experts said the local airline industry would lose its edge in the global market as the foreign airlines buy jet fuel at lower prices.
The price of jet fuel is now Tk 100 per litre after the Padma Oil Company, a subsidiary of BPC, raised it by Tk 13 a litre.
In December 2020, the price of jet fuel, which accounts for up to 46 per cent of the operational costs of an airline, was Tk 48 a litre.
The international price of jet fuel stands at $1.02 (around Tk 87.92) per litre, according to the BPC.
Mofizur Rahman, secretary-general of the Aviation Operators Association of Bangladesh, said air fares would go up by about Tk 300 as a result of the price hike.
“As a result, the number of air travellers will decrease which will have a serious impact on the country’s airline industry,” Mofizur, also the managing director (MD) of Novoair.
In January last year, the lowest airfare on a domestic route was Tk 3,200. In February 2022, it climbed to Tk 4,000.
Due to the jet fuel price hike in February, the minimum fare was increased by at least Tk 150, said insiders in the aviation sector.
Leaders of Recruiting Agency Oikya Parishad (RAOP), and the Bangladesh Association of International Recruiting Agents (Baira) complained that the BPC frequently raises fuel prices solely by citing increases in other countries, without providing any other logical argument.
They said Bangladeshi migrant workers were already suffering severely due to unreasonably high airfares to different destination countries, especially the Middle East.
“The government’s latest decision to hike the jet fuel price will add additional burdens on the remittance earners as the airlines will get an opportunity to hike the airfares even further,” said RAOP President Tipu Sultan.
Mofizur Rahman said 40 per cent to 46 percent of a carrier’s operational costs were from fuel.
Air travel will inevitably get costlier as a consequence, and it will be the passengers who will have to bear the burden at the end of the day, he added.
Aviation expert Kazi Wahidul Alam said jet fuel in Bangladesh was costlier than in neighbouring countries and others.
“Due to the hub airport, our airlines will have to buy jet fuel from Bangladesh at a higher rate. On the contrary, foreign airlines that are operating to and from Dhaka, will buy jet fuel at a lower price from their respective countries,” he said.
“As a result, we won’t be able to compete with our global competitors,” he said.
Contacted, a top BPC official said the respective committee of the BPC has increased the price of jet fuel due to high import costs. He also said compared to Kolkata, the price of jet fuel in Bangladesh was much lower.
(TDS)
