Ongoing delay in taka pricing for airfares and logistics - a costly setback

In April 2023, Bangladesh government announced a policy to stabilize airfares and logistics costs by mandating that both local and foreign airlines charge in Bangladeshi Taka (BDT) instead of US Dollars. This move was aimed at curbing the rising cost of air travel, exacerbated by the devaluation of Taka against US Dollar. However, over a year later, the promised implementation remains delayed, with mounting consequences for both consumers and local businesses.

The policy's intent was clear: by reducing reliance on foreign currencies, government hoped to stabilize fluctuating airfare prices, especially for migrant workers traveling to Middle East. For these workers, high ticket prices had become an added burden, driven by volatile exchange rates. The transition to Taka pricing was meant to shield consumers from this uncertainty and offer more predictability in travel costs.

Yet, the policy's repeated deferrals have undermined its original purpose. Initially slated for implementation in July 2023, the rollout has now been pushed back to January 2025, with no guarantee of further delays. These ongoing setbacks have already started to harm both consumers and businesses. Airlines and logistics companies continue to face higher operational costs as they are forced to rely on an unstable exchange rate. Moreover, foreign airlines, exempt from the Taka pricing mandate, continue to charge fares in US Dollars, giving them a competitive advantage over local carriers.
The impact of these exchange rate discrepancies is glaring. Domestic airlines like Biman are forced to convert US Dollars at a higher rate than market value, leading to financial losses for both passengers and logistics providers. For example, in October, Biman set its exchange rate at 119.98 BDT per USD, while banks were offering 119.00. This discrepancy caused a loss of approximately Taka 1.5 billion in just one month, underscoring the financial strain on local businesses.

These operational inconsistencies put domestic businesses at a distinct disadvantage. While foreign airlines remain unaffected by exchange rate fluctuations, Bangladeshi carriers are burdened with the costs and risks associated with currency conversion. This situation drives up ticket prices, ultimately harming consumers. The uncertainty surrounding the policy's execution only deepens the problem.

The logistics sector is similarly affected. Freight forwarders, grappling with volatile exchange rates, face unpredictable costs that hinder their ability to plan and budget effectively. This instability damages businesses and disrupts the broader economy, particularly given the logistics sector's critical role in trade and supply chain management.

However, government's failure to implement Taka pricing policy on time has eroded public trust in its ability to deliver on crucial economic reforms. For the sake of consumers, businesses, and the economy at large, the government must honour its commitment to implement Taka pricing by January 2025. Any further delays will only deepen the financial strain and further damage confidence in government policies. Economic stability cannot be postponed indefinitely.