Bangladesh domestic aviation faces steep decline as airlines seek policy reform

Dhaka : Bangladesh's domestic aviation market has contracted sharply in recent years, with passenger demand falling by about 40 percent as improved road and rail links, weaker consumer purchasing power and soaring airline operating costs put pressure on carriers, according to Mofizur Rahman, Managing Director of NOVOAIR and secretary general of the Air Operators Association of Bangladesh (AOAB).

Talking to The Bangladesh Monitor, Rahman said the domestic market expanded until around 2022 but has since declined steadily. Routes that once supported numerous daily flights have seen significant reductions, while services to Barishal and Jashore have been suspended. Saidpur, which previously had around 20 daily flights, now has fewer than 10 combined services, he added.

Demand shifts, fare pressure

Despite the downturn, Rahman sees continued potential on routes to Cox's Bazar and Sylhet. Poor road connectivity to Sylhet, in particular, could support stronger demand for air travel, he claimed.

He attributed high domestic fares partly to the sharp depreciation of the taka, noting that the dollar exchange rate has risen from around BDT 80 to roughly BDT 127.

Mofizur Rahman

At the same time, airline operating costs have increased by around 70 percent, according to Rahman. Fuel remains one of the largest expenses, accounting for about 45 percent of total operating costs, while sustained high fuel prices continue to put pressure on carriers.

Aircraft parts and other aviation-related expenses have also increased, while inflation and broader economic pressures are adding to airlines' financial burden.

Rahman mentioned private carriers are struggling to remain profitable while competing with Biman Bangladesh Airlines, which receives government support. He argued that private airlines need a more level competitive environment to sustain operations.

NOVOAIR eyes international expansion

NOVOAIR is preparing to expand beyond the domestic market. Rahman noted the airline is in discussions with aircraft lessors and hopes to finalize an acquisition or lease arrangement by the end of 2026.

The carrier plans to begin international operations with three aircraft, potentially Airbus A320/A321s or Boeing 737s. Proposed destinations include Thailand, Malaysia, Singapore, the UAE and Oman.

Rahman also added international operations would provide the airline with an opportunity to diversify its revenue base as domestic demand remains under pressure.

Calls for new aviation policy

Rahman further mentioned Bangladesh urgently needs a comprehensive, business-friendly national aviation policy. The country's Civil Aviation Rules date to 1984, although they have subsequently been amended, and remain the core regulatory framework for civil aviation.

He contrasted Bangladesh with India, which introduced an integrated National Civil Aviation Policy in 2016 covering connectivity, infrastructure and regulatory reforms.

Rahman also called for stronger consultation between regulators and industry operators, arguing that infrastructure investment should be aligned with actual aviation demand and national priorities. He said a parallel runway at Dhaka airport deserves greater attention because of the capital's growing air traffic.

Looking ahead, he said Bangladesh's aviation sector still has considerable growth potential if regulatory barriers are reduced, government agencies coordinate more effectively and competition with Biman becomes more balanced.

"Market share of other local airlines must grow," Rahman concluded, arguing that policymakers should create conditions that allow private carriers to expand sustainably.