Biman Bangladesh Airlines will commence a twice weekly scheduled link between Dhaka and New York, via Birmingham in the spring of 2014 and it is considering other markets across North America that could potentially be served on a one-stop strategy via Birmingham. Although west coast USA can be served via the Pacific, destinations such as Toronto, Canada and from Miami up to Chicago in the USA are all options that could be considered for the future.
It is a changing time at the state-owned national carrier as it seeks to overcome a history of poor service and reliability and financial losses to establish itself as a profitable world class airline. The man tasked with this job is former British Airways and Etihad Airways executive, Kevin Steele, who spoke exclusively to The HUB this week about the carrier’s ambitious plan to double capacity within the next 18 months and then again over the subsequent seven years.
Steele, who has also held roles at the former Saudi Arabian carrier Sama and Nigerian carrier Arik Air during the past five years, was appointed managing director and chief executive officer at Biman Bangladesh Airlines in March 2013 as its first ever expatriate boss and he has immediately set about updating the carrier to the 21st Century.
“I am not under any illusion to the scale of the task. My mandate from the President of Bangladesh was to turn Biman into a profitable world class airline and we are working towards that goal. It has been a big change as we have brought the airline up to date, enhancing its online presence, service and fleet,” said Steele.
The Brit, who spent 12 years working for British Airways in sales and revenue management roles, has brought fellow expatriate staff into senior roles in the commercial, customer service and IT teams and is now working to better communicate to potential customers to eradicate the past perceptions of the business. “To be honest these are not really bad perceptions, it was a reality that the carrier in the past has offered bad service and punctuality,” he explained.
With its ageing fleet of Airbus A310s and Douglas DC-10s it is no surprise to learn that the carrier had an On Time Performance of just 30 per cent prior to Steele’s arrival. To put this another way, that is only three in every ten flights arriving on schedule and had lead to the carry receiving letters of complaint from a number of airports over its performance. “In a short period of time we have managed to get this up to 70 per cent,” said Steele. “Getting this right is fundamental to the success of the business and our ability to attract customers.”
The A310s are still flying but since 2010 have been supplemented by a couple of former GOL Transportes Aéreos Boeing 737-800s (leased from GECAS) to better meet regional demand while the DC-10s are being retired and replaced by 777s. The two leased 737-800s will be replaced by brand new equipment from 2015, while a mix of leased and purchased 777s will help bring down the average fleet age from around 20 years to less than five.
The DC-10s have served the airline well but its last two units have now been in service for 25 and 35 years. Biman made its first steps to renewing its long-haul fleet in January 2010 when it acquired a 777-200ER on a one-year wet-lease from Portuguese carrier EuroAtlantic Airways. These were supplemented by two 777-200ERs from China Southern Airlines for a short period in 2010, before the carrier received two new 777-300ERs from the manufacturer in October and November 2011.
“We will receive two more 777-300ERs in the first quarter of next year and these will help facilitate further network growth, including the launch of the new Dhaka – Birmingham – New York route,” explained Steele. This service has been made possible thanks to the £40m runway extension that is soon to open at the UK airport.
Birmingham will become only the third UK airport to have direct flights to New York JFK and will offer the only non-stop service between the UK and Bangladesh outside of London, although Biman is also expected to launch flights to Manchester at a later date when it has additional capacity.
“Birmingham’s strong Bangladeshi community, new transit and terminal facilities and of course its extended runway capability that will allow us to fly direct from Dhaka next year were all key factors that attracted us to this new venture. We also recognise the many opportunities to build business and cultural links between Dhaka, Birmingham and New York and see how successful other long-haul routes have been in recent years from Birmingham,” said Steele.
The Midlands has the UK’s second largest Bangladeshi community outside of London, home to more than 50,000 people from Bangladeshi origin. The New York JFK sector is expected to be particularly popular with Midlanders wanting to reach the city for business and leisure purposes and will complement Birmingham Airport’s current daily scheduled flight to Newark Liberty International Airport by United Airlines.
“It is easy to sell the Dhaka – Birmingham service but that alone won’t drive profitability on the route,” Steele told The HUB. “In the past the airline has not necessarily operated routes for financial returns, but I want to ensure that every new service is not only sustainable but has scope to develop in the future.
“The Birmingham – New York demand will help drive this route and alongside the market dynamics, a good commercial deal from the airport we will look to work with flybe and Virgin Trains so we can sell other UK markets beyond Birmingham,” he added.
Biman Bangladesh’s main hub at Shahjalal International Airport in Dhaka is the primary air travel gateway into Bangladesh and is from where it flies to 16 different countries. The carrier has recently resumed flights from Dhaka to Delhi and Hong Kong and flights to Yangon in Myanmar commenced earlier this month.
Biman is just “dipping its toe into the market” with just two weekly 737-800 frequencies, according to Steele, but he is confident that this is another market that will grow in the future. “We will also return to Manchester, our third destination in the UK and are looking at points in China like Guangzhou and Kunming in the future. Within a year we will also introduce flights to Los Angeles,” he added.
This network growth will be supported by additional 777 arrivals. Alongside the two 777-300ERs coming directly from Seattle, Steele revealed to The HUB that the airline is currently in talks to dry lease a 777-200LR for delivery in the next six weeks as well as a couple of 777-200ERs on five –year dry leases from summer 2014.
The management is also close to finalising the acquisition of two ATR 72s to support its domestic activities. “We had initially planned to get these onboard for a December 2013 launch and I have been a little frustrated in the long procedure to acquire the turboprop aircraft and the delay to the start of our full domestic network,” said Steele, although he confirmed that this is now in the “final stages” with aircraft inspections currently taking place. “The domestic network will be available in Abacus and possibly other GDS and will not only feed our own international flights but those of other carriers in Dhaka,” he added.
All these initiatives will help Steele meet his target of returning Biman to profitability. The carrier has operated at a loss since 2008, and in the 2011/2012 financial year posted a loss of $75 million. Unaudited results for 2012/2013 suggest these have been cut almost two thirds to $25 million and these were budgeted to half to just $12 million during the current financial year.
According to Steele, results from the July-September 2013 period are “very encouraging”, and the business is “ahead” of target. “We are currently ahead of our target to be fully profitable by 2014/15. We could achieve this in the current year but definitely next year,” he said. However, he warned: “Biman can only be profitable, if we focus totally on the needs of our customer, and constantly update and improve the quality of our products and services. Then, we can establish Biman as an airline the whole country can be proud of.”