LOGISTIC AND TRANSPORTATION MANAGEMENT
MKT 681
Research paper
On

Submitted to:
Prof. Dr. Md. Habibur Rahman Dean, BBA Program
School of Business & Economics
United International University

Submitted By: Laskar Md. Muid 112 113 004 (group leader) Samsul Arefin 112 112 058 Tulloh Nasreen 112 112 062 Munia Alam 112 111 004 Mohammad Rezwan Khalked 112 113 017

Date of Submission: April 27, 2013

United International University

January 11, 2013.

Prof. Dr.Md. Habibur Rahman
Course Instructor
School of Business,
United International University,
Dhaka.

Dear Sir:

Subject: Request to accept research paper.

This is to inform you that we have prepared a research for the course Logistic and Transportation Management. We have chosen this topic for research in your guidance. We want to find out the various functions, infrastructures, problem and prospects’ of Biman Bangladesh Airlines.

We have prepared the paper within your assigned short period of time therefore it was really too hard to find the core findings. This is also to consider that we take the help from internet and analyze based on their provided information.

Sincerely Yours,

-----------------------------------
Laskar Md. Muid (112113004)

Table of Content
1. Introduction 01
2. Functions 01
3. Profiles of Infrastructure 01
4. Problems and Prospects 01
5. Conclusions and Recommendations 01

Introduction
Transport in Bangladesh is an important part of the nation's economy. Since the liberation of the country, the development of infrastructure within the country has progressed at a rapid pace, and today there is a wide variety of modes of transport by land, water and air. However, there is significant progress still to be made to ensure uniform access to all available transport.
With continued economic growth and development, Dhaka, the capital of Bangladesh is beginning to experience massive traffic congestion. Today, this is causing extreme frustration to the inhabitants of the metropolitan which is the largest and most crowded city of the nation. Many government and public transport agencies drafted policies, undertook projects and implemented programs to solve these problems. For example, the Dhaka Integrated Transport Studies conducted by the Ministry of Planning in 1991-1994 found that not only did the uncoordinated activities of Dhaka City Corporation (DCC), Rajdhani Unnayan Kartripakkha (RAJUK) and Bangladesh Road Transport Authority (BRTA) not yield the desired effects or alleviate the problems but also that there was no single organization responsible for improving the transport and traffic problems of the city.
With financial assistance from the World Bank, in 1998, Bangladesh Government created the Dhaka Transport Coordination Board. An urban transport plan was commissioned with the US Consulting Group Louis Berger and Bangladesh Consultant Ltd (BCL). The plan, launched in 2008, laid out a comprehensive transport plan for the Greater Dhaka City and its adjoining areas, such as Tongi, Gazipur, Savar, Narayanganj, Keraniganj, Narshingdi and Manikganj, covering around 1530 square miles. The plan looked at 15 Key Policy issues including safety, pedestrian preferences, public transport, non-motorized transport, travel demand management, mass transit systems, etc. Almost 70 different policy recommendations were produced under these 15 issue areas. 10 comprehensive transportation strategies were then evaluated, using a base case of no Bus Rapid Transit (BRT) or metro service and exploring many alternative combinations. Finally the adopted plan included roads in addition to using a 3 Line Mass Rapid Transit (MRT) and the 3 Line BRT. Furthermore, the plan included provisions for 54 new roads in and around the city, 3 part elevated expressways and a circular waterways program.[1]
Biman Bangladesh Airlines (Bengali: বিমান বাংলাদেশ এয়ারলাইনস), partly transcribed from English into Bengali and the other way around) is the national flag carrier airline of Bangladesh.[5] Its main hub is at Shahjalal International Airport in Dhaka and it also operates flights from its secondary hubs Shah Amanat International Airport in Chittagong and Osmani International Airport in Sylhet. The airline provides international passenger and cargo services to Asia and Europe, as well as major domestic routes inside Bangladesh. It has air service agreements with 42 countries but flies to only 16.
The airline was wholly owned and managed by the government of Bangladesh until 23rd July 2007, when it was transformed into the country's largest public limited company by the Caretaker Government of Bangladesh.[6] The airline's headquarters, Balaka Bhaban, is located in Kurmitola, Dhaka. Annual Hajj flights, transporting non-resident Bangladeshi workers and migrants, and the activities of its subsidiaries, form an integral part of the carrier's business. The carrier is currently facing stiff competition from a number of domestic Bangladeshi private airlines as well as some international carriers, which offer greater reliability and service standards, targeting Bangladesh's air transport sector which is experiencing an 8% annual growth rate, thanks to a large number of non-resident Bangladeshi travelers and tourists.
Created in February 1972, Biman enjoyed an internal monopoly in the Bangladesh aviation industry until 1996.[8] In the decades following its founding, the airline expanded its fleet and destinations, but it was adversely affected by corruption and mismanagement. At its peak, Biman operated flights to 29 international destinations, as far away as New York City to the west and Tokyo to the east. Since becoming a public limited company in 2007, the airline has reduced staff and begun to modernize its fleet. The airline has made a deal with Boeing for ten new aircraft, along with options for ten more.[9]
Biman Bangladesh Airlines is certified as safe to fly in Europe by the European Aviation Safety Agency.[10] In addition, the airline successfully passed the IATA Operational Safety Audit and since then it has been successfully flying to some of its previous destinations in Asia and Europe.[
Biman Bangladesh Airlines was established on 4 January 1972 as Bangladesh's national airline under the Bangladesh Biman Ordinance (Presidential Order No. 126).[14][15] The initiative to launch the flag carrier was taken by 2,500 former employees, including ten Boeing 707 commanders and seven other pilots of Pakistan International Airlines, who submitted a proposal to the government on 31 December 1971 following the independence of Bangladesh.[16]:6 The airline was initially called Air Bangladesh International but was soon changed to its current name.[17]
Fokker F-27 Friendship of Biman at Calcutta airport in 1974
On 4 February 1972, Biman started its domestic services, initially linking Dhaka with Chittagong, Jessore and Sylhet, using a single Douglas DC-3 acquired from India.[18] Following the crash of this DC-3 on 10 February 1972, near Dhaka, during a test flight, two Fokker F27s belonging to Indian Airlines and supplied by the Indian government entered the fleet as a replacement.[18][19] Shortly afterwards, additional capacity was provided with the incorporation of a Douglas DC-6, loaned by the World Council of Churches, which was in turn replaced by a Douglas DC-6B, leased from Troll-Air to operate the Dhaka-Calcutta route.[18][20] On 4 March 1972, Biman started its international operations with a weekly flight to London using a Boeing 707 chartered from British Caledonian.[21] The short haul fleet was supplemented by a Fokker F27 from India on 3 March 1972; the aircraft was employed on a daily scheduled flight between Calcutta and Dhaka on 28 April 1972.[16]:7 Three additional Fokker F27s were acquired during March and September of that year.[16]:6 In the first year of operation, Biman operated 1,079 flights carrying just over 380,000 passengers.[16]:8

A Biman Bangladesh Airlines Boeing 707-320C on short final to London Heathrow Airport in 1981.
Four Fokker F27s joined the fleet in 1973, enabling Biman to double the frequency of the Kolkata flight to a twice daily service.[16]:7 A Boeing 707 was added to the fleet in September and the flight to London became twice-weekly, while a Chittagong–Kolkata flight also began operating.[16]:7 In 1974, operations were extended to Kathmandu (February), Bangkok (November) and Dubai (December).[16]:7 In 1976, Biman sold two of its Fokker F27s and bought another Boeing 707 to extend international services to Abu Dhabi, Karachi and Mumbai.[16]:7 Singapore was added to Biman's list of international destinations, when a third Boeing 707 was purchased in February 1977, followed by Jeddah, Doha and Amsterdam the following year, which also saw the purchase of its fourth Boeing 707.[16]:7 In 1977, Biman was converted into a public sector corporation to be governed by a board of directors appointed by the government.[16]:7 The airline broke even for the first time in 1977–78, and made a profit the following year.[16]:8 International destinations expanded to include Kuala Lumpur, Athens, Muscat and Tripoli in 1979, followed by Yangon, Tokyo and Dhahran in 1980.[16]:7

A Biman Bangladesh Airlines McDonnell Douglas DC-10-30 lands at Kuala Lumpur International Airport in 2007.
In 1983, three Douglas DC-10s joined the fleet and the airline started to phase out the Boeing 707s.[16]:7[22] The flight network expanded further to include Baghdad (1983), Paris (1984) and Bahrain (1986).[16]:7 On 5 August 1984, Biman faced its worst accident ever when a Fokker F27 flying in from Chittagong crashed near Dhaka, killing all 49 on board.[23] The long haul fleet was then supplemented by the purchase of two new Airbus A310s in 1996, followed by the addition of two more in 2000, from Singapore Airlines and Air Jamaica, and another in 2003.[16]:7
In the 2005–06 fiscal year, Biman carried 1.15 million passengers, a growth of 70% over the previous decade. With the rise of private domestic carriers in Bangladesh, however, Biman's market share for domestic passengers dropped by 35% over the previous ten years' average, with only 162,000 passengers travelling with Biman in the domestic sector in the 2005–06 fiscal year. During the same period, Biman reported its biggest annual loss of over US$120 million (BDT 8.3 billion as of 2010), with a US$100 million (BDT 6.9 billion as of 2010) loss reported the following year.[24] Biman also fell behind on millions of dollars in payments to its fuel supplier, the Bangladesh Petroleum Corporation.

Functions

The interior of a Biman McDonnell Douglas DC-10

Biman is notable for disruptions to its flight schedule and poor customer service. In 2007, Biman faced strong criticism from major international airports including London Heathrow Airport and Dubai International Airport for its failure to maintain flight schedules. Heathrow Airport operator BAA wrote to Biman providing evidence which showed Biman had not achieved the minimum 80% usage of its allocated landing slots at Heathrow.

As required by EU and International Air Transport Association (IATA) regulations, during the summer of 2007. Biman should, therefore, not expect slot allocations at Heathrow for the summer of 2008 and should look to Stansted or Gatwick airports if it wished to continue serving London.[50] Following discussions with BAA, however, Biman obtained landing slots for the summer of 2008 on condition that it achieved 80% usage.[51] Delays continued unabated and in September 2008, Biman's Dhaka–London direct flight utilising a DC-10 aircraft was diverted and landed at Gatwick when it did not have sufficient fuel to remain in a holding pattern over Heathrow following arrival over three hours after the scheduled time.[52] In a 10 September 2008 article published in The Times, Biman was labelled the worst performer for punctuality at Heathrow, with flights delayed on average by three hours.[53] In 2008, the United Nations advised its staff not to fly with Biman, citing both safety and security concerns and Biman's unreliable flight schedules. It was made clear that UN staff who flew with Biman did so at their own risk, and would be ineligible to make claims on insurance. Biman's then newly appointed managing director said he was unaware of the UN directive, but admitted that Biman did face problems in managing its flight schedules. He expected the situation to improve with the procurement of aircraft in the coming months.[54]
Flight classes and amenities

Costlier leather seats are used in Biman's Boeing 737-800 (S2-AFL tail). Besides adding luxury, two main reasons of using leather seats are easy-cleaning and to prevent soaking of spilt liquid through padding.
A two-class service (J and Y) is operated on Biman's wide-body airliners and a single class service is available on the smaller aircraft.[citation needed] The Maslin Executive Class cabin on its Airbus A310s is set up in a 2–3–2 configuration while the setup on the Douglas DC-10-30s is a more spacious 2–2–2 configuration. The economy class cabins are set up in a typical 2–5–2 configuration.[55]

English and Bengali language newspapers are available on board the aircraft along with Biman's in-flight magazine, Digonto (Horizon), which is published quarterly. It contains mainly English content[56] and has an emphasis on tourist destinations in Bangladesh and elsewhere reachable by Biman.[57]
The Douglas DC-10-30s are equipped with a projector in each cabin, while the Airbus A310s have monitors that drop down from the ceiling below the luggage racks in the center of the aircraft. While other airlines using modern aircraft are able to provide more personal in-flight experiences via seatback LCD screens, Biman's ageing fleet has maintained the standard equipment available when the planes were manufactured.[58][59]
Biman operates a frequent flyer programme which awards customers a free round trip flight on production of ticket stubs for ten round trip journeys on Biman. The free ticket is for the passenger's most often travelled route. Journeys on local routes are excluded from the offer.[60]
An agreement was signed with Amadeus in 2007 to upgrade Biman's ticketing system with an e-ticketing solution to comply with IATA rules, which set out a deadline of 31 December 2007 for all member airlines to switch over their ticketing systems. E-ticketing has enabled major airlines to provide online check-in facilities, reducing the need to queue up at check-in counters. However, Biman has not made any attempts to improve customer service through the adoption of e-ticketing, although it has been able to reduce its own costs.[61] In 2005, Biman had briefly stopped using the Amadeus ticketing system when the government suspended the operation of a local Amadeus subsidiary following a court order, after allegations of money laundering.[62] The suspension, however, lasted only a month, and was lifted after the writ was appealed in the High Court.[63]
Biman Cargo
Biman also operates a cargo service using the cargo holds of its passenger aircraft to ship freight to international destinations.[64] It has established Cargo Village at Shahjalal International Airport where the cargo is packaged and labelled before being loaded onto its aircraft.[65]
While the air cargo industry in Bangladesh grew by 16.5% in the fiscal year 2003–04, Biman's cargo operations remained stagnant when private operators such as Bismillah Airlines, Best Aviation and Air Bangladesh produced a 108% growth from the previous year. The private operators increased their share of the cargo market by 10.6% and were responsible for handling 24% of the total 99,000 tonnes of cargo at the expense of both Biman and foreign airlines which saw a reduction in their shares by 4.6% and 6.0% respectively. Foreign airlines handled 47% of the total cargo with Biman taking on the remaining 29%.[66]
As with its passenger service and management, corruption has also been rife at Biman Cargo. An investigation in 2004 uncovered irregularities in a number of Biman's Middle East operations which deprived the government of millions of dollars in revenue. Biman officials in Dubai were found to have been "extending special privileges" to the main freight handler in exchange for bribes.[67] The smuggling of foreign currency and gold bars is reported to have taken place at the Biman Cargo Village by Biman and CAAB employees. A number of arrests were made but the perpetrators evaded punishment through lack of evidence and pressure from the CAAB union.[68]

Profile of Infrastructure

Bangladesh Biman was established with a slogan "Your Home in the Sky" and it started operations in February 1972. After successfully completing a few domestic flights, on 10 February 1972, this aircraft crashed while on a test-flight. Soon after, one Boeing 707 and two Fokker F27 friendship aircrafts were included in the fleet, allowing Biman to begin international flights. Until 1981, Biman's fleet comprised of 6 Boeing aircrafts, two F-28, six F-27 and three DC-10s. Meanwhile, all the Boeing 707s were gradually phased out, while the fourth DC 10-30 aircraft was added to Biman's fleet in January 1989.
To modernize Biman's domestic operations, two ATP aircrafts were added in 1990. The latest procurements of the carrier include two Boeings 737 that the airliner received in January 2003, followed by two F-28 procured in May 2004. A member of IATA, it flies passengers and cargo to 18 international destinations in Asia and Europe. It goes to most of the destinations directly or via a stopover. Convenient transfer connections from Dhaka to regional destinations are easily available. Biman is reputed for its well-trained and dedicated crew with appreciable safety record.

Presently Biman has two 737-800, four DC10-30, three A310-300 and three F28-4000 aircraft in its fleet. Biman is in the process of procuring more new generation aircraft such as Boeing 777-300ER, 787-8 and 737-800 for its fleet.
Biman does entire maintenance work on its F-28 aircraft. Biman is also doing C-check, D-check on DC10-30 and A310-300 in its hangar complex at Dhaka. Checks, repair and maintenance of one DC10-30, one wide bodied Boeing and two F-28 aircraft can be done simultaneously there. In addition to its own aircraft, Biman's ground-handling unit also provides support to Singapore Airlines, Thai Airways, Malaysia Airlines, Qatar Airways, Emirates, Kuwait Airways, Oman Air, Saudia, Gulf Air, PIA, Indian Airlines, Dragon Air, Druk Air, etc. at Hazrat Shahjalal International Airport, Dhaka.
Biman Flight Catering Center (BFCC) has the capacity of producing 8500 meals a day and is providing cuisine not only to Biman but also to Saudia, Etihad, Malaysia Airlines, Thai Airways, Emirates, Dragon Air and China Southern Airlines. Biman Bangladesh Airlines Training Center (BATC) has been training its ground, flight service and technical personnel to meet the growing needs of Biman's manpower. The center has also been turned into a seat of training and technical seminars for local travel agents and some foreign airlines.

Biman Poultry Complex, a subsidiary of Biman was formed in 1976 and was put into operation in November 1980 to create a profit earning concern to augment the cash flow of Biman. The complex is situated 40 km north-west away from Dhaka City over 75 acres of land at Ganakbari, Savar, Dhaka.

There are now 14 aircraft in the Biman fleet. With these aircraft, 20 international and three domestic flights are operating. Biman aircraft consist of two Boeing-777, two Boeing-737, two Airbus - 310, one Boeing - 747, four - DC10 and three F-28. One F-28 is beyond repair, one is idle and the other is occasionally used for regional flights. It is planned to withdraw these aircrafts from operation. Three DC-10 are idle and one is not fit for repair. One DC-10 is in the hanger for five months. Another DC-10 has found its place in the hanger for technical fault.

Problems and Prospects

Biman Bangladesh Airlines passed 40 years from its inception. It has long flying experience in the air but may be not enough for making a profitable organization! Unprofessional management is one of the major reasons for Biman's ill health operationally and financially. During all the 40 years, civil or military bureaucrats with no expertise and aviation industry experience, operate and manage the Bangladesh Biman. Sometimes, some chief executives has failed make the airline profitable due bureaucratic red tape. Even the Biman management has hardly any freedom on recruitment, promotion and posting.

The top Biman official was always appointed from outside without looking into their experience. They were appointed on deputation. Biman was converted into a company by the caretaker government for running it commercially. Transparency International Bangladesh (TIB) conducted a survey on Biman in 2007. It was found that no experienced staff was appointed in the decision-making stage. There was shortage of efficient staff. Even after converting into a company experienced officials were not recruited in the Board.

According to the civil aviation minister, fuel price hike, excessive expenditure on maintenance of age-old aircrafts, the use of leased aircraft and no hike in the ticket price due to competition were responsible for the losses over the years.

Loss of Biman

The national flag carrier incurred a record loss of Tk 5.45 billion in the last fiscal year (2011-12) alone. This amount included a substantial amount of losses on account of reported payments of high interest changes to different government agencies and financial institutions. Biman lost a large amount of revenue due to suspension of some of its routes. Dhaka-New York was a popular route for the Bangladeshis that Biman had suspended. This route was so popular that Bangladeshis felt at home to travel on this route. Its recovery and the role of the last caretaker government In 2007, the immediate past caretaker government, turned Biman into a Public Limited Company (PLC) to free it from government control and run it professionally and commercially. With it and other measures, the national flag carrier of Bangladesh envisaged a bright new era with new fleet, new brand image and identity and new management.

Following turning Biman into PLC, the Board of Directors of the airline, finalized modernization of Biman fleet.10 aircraft four Dream liner B787s, four B777-300ERs and two B737-800s with option for equal number of aircraft, were ordered.
The Board also started 'Road Show' to attract foreign assistance to re-structure the carrier and to recast management, to run the airline professionally, efficiently and commercially. Primary objective was to take Biman into a new era with new generation fleet, new corporate identity including a totally redesigned aircraft livery and company logo, to revitalize the brand image better as well as to reflect Biman's future direction. The airline made profit in 2008 and in the first half of 2009 but thereafter it again plunged into losses.

Role of the present elected government
All initiatives of the last caretaker government have gone in vein when the present elected government behaves like the previous political governments. The current elected government abandoned the efforts to provide new identity, induct professional management and infuse skilled manpower to make Biman a modern and efficient airline. So, the prospect of a bright new era soon evaporated and the promise of a new era not in sight any more at least under existing situation.
Change or development now-a-days does not deal with appearance while ignoring the core issues. It is, by any measure, a productive investment. The new logo and livery displayed on every aircraft in the new fleet, was considered in itself an important, essential and strategic opportunity-- a golden opportunity that may not happen again.

What experts feel?
Aviation analysts Kazi Wahidul Alam said the appointed of a foreign CEO has created a hope. But if he fails to work independently, the struggling Biman will not be recovered from its vulnerable condition.
He suggested the government to offer independent environment for the newly appointed professional CEO. The CEO should have a good management team with a roadmap. Where the Biman will go, how many days will be required to make it profitable are very essentials to know from the newly appointed foreign CEO, he added.
A retired Biman Manager said only avoid of intervention from the government's high-ups can make the Biman profitable. The interventions from the ministry, the parliamentary standing committee, a special force of the government and some dishonest nexus within the Biman have created the national flag carrier vulnerable. So, if those intervention is eliminated, Biman can be turned into a profitable PLC.

Conclusion and Recommendation
What needs for Biman ?
Only the foreign CEO is not enough for the state-backed airlines. He should have some experienced personnel in different key positions in his team. The Biman's manpower should be restructured to check inefficiency. The CEO and the management should be free from all shorts of intervention from outside the Biman. The government should seek a roadmap from the Biman's newly appointed CEO.

What is his plan on the struggling Biman, when it will be a turn into a profitable company should be sought from him? Besides, the existing flights should be take-on and take-off in time to recover the image of the national flag carrier. The Biman is now running with manpower problem. It has lack of skilled and experienced manpower. The organogram of the Biman should also be restructured.

It should recruit some professional and experienced manpower in the key positions. Business of Biman including ticket sale, route selection, GSA selection, catering service operation, ground handling and other works should be handled with professional manpower. The Biman parts and equipment purchase, overhauling of the engines and lease of the aircraft should be handled interference free to check fraud and misappropriation of the public funds.

The Biman management should select the route of its airlines based on the details research and feasibility study. At this moment, many routes are selected without any sophisticated study or research. It needs the perfection in route selection.

The ticket sale should be handled by one or more than one professional agencies. Besides, the management should be taken initiative to promote the airlines in different potential countries. The government should make compulsory journey for the government and semi-government officials through the Biman Bangladesh when they will fly abroad for the official works.

The Biman can give some lucrative offers for the Bangladeshi expatriates at different countries for a limited period which could increase the seat occupancy of the aircraft in different routes.