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Our airport ground handling services should be competitive

Published : Monday, 17 February, 2025 at 12:00 AM  Count : 1142
MS Siddiqui
The Airport Ground Handling Market encompasses services that support aircraft operations at airports, such as passenger handling, baggage handling, ramp services, cargo handling, and aircraft cleaning. This industry requires seamless coordination between airlines, airports, and ground-handling service providers to ensure safe and efficient operations. Airlines and airports are increasingly seeking cost optimization, improved efficiency, and specialized expertise, creating opportunities for service providers to expand their market presence.

A growing trend in the industry is the outsourcing of ground handling services, offering specialized companies the chance to operate in this competitive space. Globally, appointing multiple service providers is the norm to ensure cost-effective and efficient services through competition. However, in Bangladesh, Biman Bangladesh Airlines has been authorized as the sole provider of ground handling services, despite the possibility of appointing more than one service provider.

The European Union addressed this issue through Directive 96/67/EC in 1997, opening the ground handling market to competition. Before this, monopolies were the norm at EU airports, resulting in high prices and poor service quality. Under EU regulations, the majority of larger airports are open to competition, providing airlines with better options for ground handling services, resulting in improved service levels and lower rates for passengers.

In contrast, only Biman Bangladesh Airlines has been assigned the responsibility of ground handling for the new third terminal at Dhaka Airport, raising concerns about its ability to manage such a large facility. No international airport operates with a single ground handling service provider, and Biman's performance at Dhaka Airport has been subpar. Currently, Biman provides ground handling services for about 40 foreign carriers at the airport, but it struggles to manage Terminals 1 and 2 and lacks the trained workforce to effectively operate the new terminal.

Airlines operating at Dhaka Airport argue that ground handling charges are far higher than at airports in developed or regional countries, leading to significantly increased operational costs. For example, airlines pay Biman between $2,200 and $6,000 per flight for ground handling services, in addition to $0.07 per kilogram for cargo operations. The cargo manager of a major foreign airline at Dhaka Airport revealed that cargo charges for a 100-ton Boeing 777 aircraft in neighboring countries like India, Pakistan, and Sri Lanka range between $3,500 and $4,000, but in Dhaka, the same service can cost up to $20,000.

Due to the high costs of ground handling services, many Bangladesh exporters prefer to send their goods to Delhi for airlift to international markets, making Dhaka an expensive and inefficient hub for air cargo. Airfreight from Dhaka to destinations such as New Jersey, New York, Madrid, and London is considerably more expensive than from airports in nearby countries like India. For example, airfreight from Dhaka to New Jersey costs $6 per kilogram, while from Delhi, it costs only $4.

In November 2023, the International Air Transport Association (IATA) ranked Lagos and Abuja as the most expensive airports in the world. While Bangladesh was not included in the survey, insiders suggest Dhaka Airport is the second most expensive cargo airport globally. Despite charging high fees, Biman only provides two to three ground handling staff per flight, which is insufficient. As a result, 38 foreign carriers operating at Dhaka Airport have had to hire approximately 1,150 support staff to compensate for the lack of ground handling personnel, further inflating operational costs and ticket prices.

The high cost of airfares for passengers from Bangladesh also reflects these inefficiencies. For instance, a Bangladeshi migrant traveling from Dhaka to Riyadh faces ticket prices ranging from Tk55,000 to Tk77,000, while a ticket from Kolkata to Riyadh is about Tk10,000 cheaper. The poor performance of Biman in providing adequate services to passengers and airlines has led to widespread criticism. Carriers and passengers agree that a monopoly in ground handling services at the new terminal will not ensure quality service.

"Biman's monopoly in ground handling services at Dhaka airport results in high costs and poor service quality. Introducing competition with multiple service providers could reduce costs and improve efficiency"

The Civil Aviation Authority of Bangladesh (CAAB) appointed the International Finance Corporation (IFC), a World Bank Group entity, as a transactional adviser to evaluate the ground handling situation. In its report, the IFC recommended the appointment of multiple ground handling service providers at the third terminal to improve service quality. A survey conducted by the Dhaka airport authority also showed that 93 airlines favored having multiple service providers, supporting the idea of competition for better services.

IATA has emphasized that ground handling services should be provided on a competitive basis and that charges should reflect market conditions. In the absence of competition, some ground handlers, benefiting from monopoly positions, have charged excessive fees unrelated to service levels or market prices. The European Union has set a precedent by allowing competition at airports, while limiting the number of suppliers to at least two, with at least one independent from the airport or dominant airlines. Some airlines also opt for self-handling, providing ground services in-house.

Abusive pricing, such as what is seen at Dhaka Airport, has a negative impact on airlines' operating costs, and the monopoly situation can also lead to suboptimal service quality and inefficiency. The International Civil Aviation Organization (ICAO), a UN agency, states that competition in ground handling services helps reduce charges without compromising service quality. ICAO's guidance also calls for cost-based pricing to ensure that charges are reasonable.

The current monopoly at Dhaka Airport, led by Biman, results in foreign airlines being forced to bear excessive costs, making the airport more expensive than regional alternatives. The airport's high tariffs and inefficient practices are driving businesses away. For example, some Bangladesh exports are now shipped to the Maldives by sea, then airlifted to Europe to save on costs.

The opening up of the ground handling market to competition is crucial for reducing operating costs for airlines and improving the quality of services for passengers. Introducing additional independent service providers would foster competition and force the major service provider to improve both the service and its pricing structure. The involvement of an international airline or company as one of the service providers could further enhance service quality and lower costs. If the ground handling market at Dhaka Airport remains monopolized, the vision of Dhaka becoming a regional hub will remain unfulfilled.

The government should prioritize the benefits of competition and better services over the interests of Biman. Introducing competition among multiple ground handling providers will lead to lower operational costs for airlines and ultimately improve the airport's competitiveness, benefiting the entire nation.

The writer is a Former Non-Government Adviser, Bangladesh Competition Commission, Legal Economist & CEO, Bangla Chemical



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