Bangladesh Biman switches to French Airbus from American Boeing

Biman Bangladesh Airways, the nationwide flag provider of Bangladesh, has taken a groundbreaking choice to buy 4 Airbus plane from France, every costing US$180 million. This marks the primary enterprise deal between Biman and Airbus, ending many years of partnership with American Boeing. This stunning shift has despatched ripples of shock by Boeing and the US administration, highlighting the advanced interaction of aviation, politics, and worldwide relations.

Biman’s choice comes amid rising dissatisfaction with the Biden administration among the many ruling occasion in Bangladesh. Tensions have been excessive as a consequence of what Dhaka perceives as US interference in its home affairs. Accusations of makes an attempt to unseat Prime Minister Sheikh Hasina and assist for the Al Qaeda-connected ultra-Islamist Bangladesh Nationalist Social gathering (BNP) and its coalition associate Jamaat-e-Islami (JeI) have soured relations. Washington’s stress by threats of visa restrictions and sanctions has solely exacerbated the scenario.

In an interview, Biman’s outgoing Managing Director and CEO Shafiul Azim defined the rationale behind the change: “Any firm can face dangerous occasions at any time. We’re negotiating with Airbus as a part of a long-term plan to make sure we’re not in any type of hazard, that our power doesn’t wane sooner or later, and that we’re not uncovered to any danger”. Azim referred to current incidents and technical points with Boeing’s 737 Max plane as a part of the danger they purpose to mitigate.

In January 2024, Biman’s administration determined that buying Airbus A350 plane could be financially disadvantageous. Nonetheless, simply 4 months later, the nationwide provider reversed this stance in favor of Airbus. This shift underscores the dynamic nature of the aviation trade and the strategic choices airways should make in response to evolving circumstances.

Boeing, caught off-guard by this choice, emphasised some great benefits of sticking with their plane. Ryan Weir, Boeing’s Vice-President for Business Gross sales and Advertising and marketing in India and South Asia, highlighted an unevaluated proposal by Boeing that included free consultancy providers to assist improve the Civil Aviation Authority of Bangladesh (CAAB) to Class 1 standing by the U.S. Federal Aviation Administration. Boeing officers additionally assured that the Export-Import Financial institution of america (US EXIM Financial institution) would offer enough credit score for brand new Boeing plane.

Boeing’s Managing Director of Business Advertising and marketing for Eurasia and the Indian Subcontinent, Ashwin Naidu, identified that the Boeing 787s may generate about US$5 million extra revenue per aircraft yearly for Biman as a consequence of gasoline effectivity and decrease upkeep prices. Naidu additionally warned of the extra US$150 million value over the following 20 years if Biman opted for a combined fleet of Airbus and Boeing plane, citing bills associated to airplane and engine spares, tooling, coaching, and administrative overheads.

Alternatively, Airbus President and Managing Director in India and South Asia, Remi Maillard, argued that Biman’s present fleet doesn’t profit from fleet commonality. He famous that Biman’s fleet contains varied variations of Boeing plane and Sprint 8-400, which don’t share a typical cockpit design, negating the advantages of cross-crew qualification coaching. Maillard asserted that the A350-900 presents the bottom value per seat of any massive wide-body plane, with vital benefits in gasoline burn, working prices, and CO2 emissions.

The market potential in Bangladesh is appreciable, with predictions that the fleet measurement will triple over the following 20 years as a consequence of sturdy financial progress. This has intensified the competitors between Boeing and Airbus. The tug-of-war has been ongoing for the reason that Bangladesh authorities determined to amass extra wide-body planes for Biman’s fleet.

The choice to modify to Airbus was influenced by a number of elements, together with a joint communique signed in London between the UK’s Minister of State within the Division of Enterprise and Commerce, Lord Dominic Johnson, and Bangladesh Prime Minister’s Non-public Trade and Funding Adviser, Salman F Rahman. This settlement included the acquisition of 10 A350 plane to ascertain an aviation and commerce partnership aimed toward creating Bangladesh’s aviation sector.

Regardless of the strategic shift, Biman faces vital challenges. The airline incurred a lack of Tk 25.91 crore in its principal enterprise, flight operations, within the final fiscal 12 months. Biman is shedding cash on most of its 22 worldwide routes, with profitability restricted to flights to Jeddah, Singapore, and Kuala Lumpur. The provider’s different providers, together with floor and cargo dealing with, catering, and its farm, Biman Poultry Complicated, are what stored it afloat.

Transitioning to a combined fleet would require main expenditures. Whereas Biman estimated a price of US$80 million for this transition, Boeing calculated it to be US$146 million. The introduction of Airbus plane will necessitate in depth coaching for brand new crews and engineers, including to the price and complexity of the transition. Moreover, Biman might want to make investments US$61.8 million in spare engines and elements for the Airbus planes.

Regardless of these challenges, Biman’s transfer to Airbus represents a strategic choice aimed toward making certain the airline’s long-term stability and competitiveness. The low-interest mortgage from an export credit score company will cowl 80-85 % of the financing for the brand new plane, with the remaining funds probably sourced from high-interest business loans.

Biman Bangladesh Airways’ change from Boeing to Airbus marks a big shift within the airline’s technique and a response to broader geopolitical dynamics. This choice highlights the complexities of the aviation trade, the place financial, operational, and political elements converge to form the way forward for nationwide carriers.