Jet fuel now costlier than ever

At BDT 5 per litre, stakeholders in the aviation industry have blasted Bangladesh Petroleum for its "whimsical decision" to increase the price.

Rashidul Hasan

Rashidul Hasan

The Daily Star


File photo

October 28, 2022

DHAKA – Local airlines will have to face a huge blow, as the price of jet fuel has been hiked again, this time for domestic routes. The airlines are worried about their operational costs and said that this increase will ultimately hike airfares, burdening travellers.

Padma Oil Company Limited, a subsidiary of Bangladesh Petroleum Corporation (BPC) increased the price of jet fuel by Tk 5 per litre. The new price came into effect on October 26.

So, a litre of jet fuel now costs Tk 130.

BPC, however, slightly decreased jet fuel price for international routes.

The price for international routes will become $1, as opposed to the previous price of $1.09.

Stakeholders in the aviation industry blasted BPC for its “whimsical decision” to increase the price. They said it is illogical, as jet fuel price has remained static in the international market.

This is the 17th time Padma Oil Company increased the price in the last 23 months.

Due to the price hike, air travellers will have to pay more, sources in the aviation industry told The Daily Star.

In December 2020, the price of jet fuel, which accounts for 46 to 50 percent of an airline’s operational costs, was Tk 48 a litre.

The price increased by 170 percent in the last 23 months, according to sources in different local airlines.

Talking to The Daily Star, Mofizur Rahman, secretary general of Aviation Operators Association of Bangladesh (AOAB) and managing director of Novo Air, said there is no logic behind the latest decision.

Mofizur said BPC is taking a one-sided decision. “We don’t have any say in this regard.”

“We want to get rid of BPC’s monopoly and whimsical decisions,” he said. “The country’s airline industry is on the path of collapse due to frequent fuel price hikes.”

Asked about the price decrease for international routes, Mofizur said around 1 to 1.25 lakh litres of jet fuel are used for domestic routes per day, whereas around 12 to 14 lakh litre are used for international routes.

“In that case, how will the government minimise its losses by hiking the price for domestic routes and bringing down the price for international routes?” he questioned.

“It is evident that the government has taken the decision to give undue facilities to particular airlines,” he said without elaborating.

Aviation expert Kazi Wahidul Alam said the country’s airline industry will not survive if the government does not cooperate.

“In the present situation, the industry is already struggling to exist,” he said.

Alam — also editor of The Bangladesh Monitor, a weekly publication on aviation and tourism — said the number of passengers has already fallen, especially for Jashore and Barishal routes, after the inauguration of Padma Bridge.

“If airfare further goes up due to the price hike, passengers will just choose alternative modes of transport,” he said.

Lutfor Rahman, chief executive officer of US-Bangla Airlines, said, “BPC is hiking the jet fuel price almost every month. But we are at risk of losing passengers if we increase airfare accordingly.”

“Air operators are at risk of bankruptcy if they do not increase the airfare in line with the price hike,” he said. “We are already in deep trouble due to various reasons. This hike will add insult to injury.”

Sources at the country’s two private airlines — US-Bangla Airlines and Novoair — said a year and a half ago, the average fare for domestic routes was around Tk 2,500. But that has gone up to around Tk 5,000 due to hikes.

US-Bangla operates around 448 flights weekly, while Novoair operates around 350 flights on seven domestic routes, said sources in the two airlines.

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