Term paper on

“The Airline Industry in Bangladesh : A management Colosseum”

Faculty of Business Studies
Bangladesh University of Professionals (BUP)

The Airline Industry in Bangladesh : A management Colosseum

Submitted to

Major General (Retired )
Professor Alauddin M A Wadud,BP
Course Instructor,
Strategic Management
Faculty of Business Studies
Bangladesh University of Professionals (BUP)

Submitted by

1. Priodarshine Auvi (EV1202026) 2. Mohammad Abdul Momin (EV1202027) 3. Kazi Kamrul Alam (EV1202029) 4. Mahbubur Rahman (Ev 1202028) 5. Maruf Hossain (Ev 1202014)

LETTER OF TRANSMITAL
Aug 27, 2013

Major General (Retired )
Professor Alauddin M A Wadud,BP

Course Instructor
Strategic Management
Faculty of Business studies
Bangladesh University of Professionals (BUP)

Subject: Submission the term paper of “The Airline Industry in Bangladesh: A management Colosseum”

Dear Sir,

With due respect and humble to inform you that it is my pleasure to submit this report on“The Airline Industry in Bangladesh: A management Colosseum”. As your valuable suggestions and guidance, we have tried my best to prepare the report properly. There may be some shortcomings. We would be grateful if you consider those as excusable points and we like to thank you for your kind cooperation. Despite the limitations, we sincerely believe that you will find this report very significant and informative.
Therefore, we pray and hope that you would be kind enough to accept my report for evaluation and oblige thereby.

Thank you.
Sincerely yours,
Md. Kazi Kamrul Alam
(On behalf of the group)

LETTER OF ENDORSEMENT

This is to certify that Priodarshine Auvi (EV1202026), Mohammad Abdul Momin (EV1202027) , Kazi Kamrul Alam (EV1202029), Md Mahabubur Rahaman(E1202028) and Maruf Hossain (E1202014) have prepared this term paper entitled “The Airline Industry in Bangladesh: A management Colosseum ” under my supervision and guidance. I do hereby approve the style and content of this term paper. This is for the partial fulfillment of two years professionals’ degree of EMBA in Bangladesh University of Professionals, Mirpur Cantonment, Dhaka-1216. (Any option, suggestion made in this report is entirely that of the author of the report. The University does not condone nor reject of these opinions or suggestions).

...............................................................

Major General (Retired )
Professor Alauddin M A Wadud,BP

Course Instructor
Strategic Management
Faculty of Business studies
Bangladesh University of Professionals (BUP)

ACKNOWLEDGEMENT

The outcome of any particular research depends on the contribution of a number of people, especially those who take time to share their thoughtful guidance, ideas and suggestions to make the research a successful one. This research is not an exception from the mentioned criteria. A number of people have made significant contribution in preparing this report. Their insights, advise and suggestions helped us a lot.

At first, we would like to express our deepest sense of gratitude; all sorts of praises to the “Almighty Allah”, whose blessing have enabled me to complete this report.

It is our proud privilege to acknowledge the sincere and deepest sense of gratitude to our course instructor Major General (Retired )Professor Alauddin M A Wadud,BP, Course Instructor, Strategic Management, Faculty of Business studies, Bangladesh University of Professionals (BUP) for continuously guiding us about the development and preparation of the paper. He has enriched us with necessary ideas and concept for incessant improvement of the report. We also express our sincere thanks to regent airways, united air way and novo air ways for their all out cooperation by providing necessary data and valuable opinion.

…………………………………

Kazi Kamrul Alam

On behalf of Group

Table of Content

CONTENTS PAGE

Chapter – 1.0

Introduction & Methodology: 1

1.1 Introduction on Airline Industry in Bangladesh 1

1.2 Objective of the Study 1

1.3 Methodology 1

1.3.1 Statistical Technique 1

1.3.2 Nature of Data 2

1.3.3 Sources of Data 2

1.3.4 Period under Consideration 2

1.3.5 Nature of Analysis 2

1.3.6 Standard of Comparison 2

1.4 Limitation 3

Chapter – 2.0

Analysis & Interpretation of Financial Data of airline industry in Bangladesh :

2.1 Analysis of Balance Sheet 4

2.2 Analysis of Cash Flow Statement 5

2.2.1 Net Cash Flow from Operating Activities 6

2.2.2 Net Cash Flow from Investing Activities: 7

2.2.3 Net Cash Flow from Financing Activities: 7

2.3 Ratio Analysis 8

2.3.1 Liquidity Ratio 9

2.3.2 Asset Management Ratio 13

2.3.4 Profitability Ratio 18

Chapter - 3.0

Strategic Analysis

3.1 Industry Analysis 23

3.2 SWOT Analysis of Airline Industry in Bangladesh 25

3.3 Competitive Strategy Analysis 27

3.4 Corporate Strategy Analysis 28

Chapter – 4.0

Accounting Analysis:

4.1 Asset Analysis 29

4.2 Liability & Equity Analysis 30 4.3 Revenue Analysis 32 4.4 Expense Analysis 32

Chapter – 5.0

Market analysis

5.1 Probable market size for Airline market in Bangladesh 33

5.2 Cost analysis on the basis of route and aircraft type 35

5.3 Regulatory constraints in Airline industry of Bangladesh 38

5.4 Challenges facing Airline Industry in Bangladesh 41

5.5 Prospect of future market 43

5.6 Key success factors for some airlines

5. 7 Analysis on the basis of Porters Five Forces Model and finding which factory is doing well

6. Findings & Conclusion 45

7 Recommendation 48

List of Figures and pictures

List of tables

References 36

LIST OF FIGURE

|FIGURE NO. |FIGURE NAME |PAGE NO. |
|Figure 2-1 |Cash Flow from Operating Activities |06 |
|Figure 2-2 |Cash Flow from Investing Activities |07 |
|Figure 2-3 |Cash Flow from Financing Activities |08 |

EXECUTIVE SUMMARY

Derrick’s Ice-Cream Company is located in modern premises and manufactures and distributes 30 different ice-cream product lines from suburban base in the UK. The products are distributed by Derrick’s own fleet of refrigerated trucks to six major wholesale distributors. Annual sales are currently around the £10m level, distributed among the wholesalers. Derrick’s has control about 35% of its metropolitan market, but this shrinks to less than 10% in outlying areas where there are many small competitors. Derrick’s will usually hold up to four weeks of stock in their central cold stores to meet the distribution requirements of their six major customers

Airlines Industry in Bangladesh: A management coliseum

Chapter:1

1.1 Introduction:

Airlines industry in Bangladesh has been considered as a very special sector which has enormous potentiality to contribute both in national economy as well as facilitating in other sectors of business to flourish. As whole it is combination of national and international carriers for passengers and cargo, infrastructures and available facilities managed by government and non-government organization, other aviations operating in Bangladesh, resource sharing opportunities for maintenance, control, operational and other administrative support measures also. History of airlines industry of Bangladesh is rooted back in Second World War. Allied forces constructed more than 123 airstrips in and around Bangladesh to launch air attacks in Burma front against axis power. After the world war most of them were abandoned and later on handed over to military estate of the then East Pakistan. Basing on requirement and over the course of time few of them are maintained with supporting infrastructures and kept in operable condition. After the independence the national flag carrier of Bangladesh started its journey with a single DC-3 aircraft and presently enriched her inventory with eight different types of aircraft. From 1972 to 1992 Biman Bangladesh airline was availing monopoly business in domestic route. It has been almost sixteen years since private airlines have been allowed to operate from Bangladesh breaking monopoly of Biman airlines. Till 2013 eleven airlines have registered in civil aviation authority of Bangladesh(CAAB) and out of then six airlines including GMG airlines, Air parabat and Aero Bengal etc have dived nose to become non operating. At present 3 private fixed wing airlines are operating and another one or two airlines are going to launch very soon. In addition currently 26 passenger carrying aircraft and nine freight and cargo airlines are operating.

Management of different airlines organizations, ground support organization, maintenance facilities, regulatory and infrastructure organization and coordination among the organizations is a management coliseum where each organization is dependent on others. Success of one organization depends on the performance and cooperation of other organization. However, with proper planning, strategy, management and operation of individual organization especially the newly introduced airlines can achieve sustainable growth rate. At present air traffic flow growth rate is 11.58 percent from the year of 2011 to 2012. Air travel has registered steady growth rate for last two years. The higher the economic growth, the long the trail back at road the more the growth of air travel. Market size for airlines is expanding gradually. Prospect of investment in airlines industry is becoming more prominent with the increasing growth rate in airline industry.

The success of new investment depends on the management coliseum of different organ of airline industry taking the advantages of strength and utilizing opportunities of each organization. The industry analysis has been done keeping in mind five forces of porters model influencing the industry, analyzing SWOT of individual organization and comparing among them. Whatever the strategy an organization takes it should always be reviewed and be prepared for surprises from rival organizations.

Chapter 2

2.1 Corporate Profile:

Biman Bangladesh Airlines (Bengali:) is the flag carrier airline of Bangladesh. Its main hub is at Shahjalal International Airport in Dhaka, and also operates flights from Shah Amanat International Airport in Chittagong, earning revenue from the connecting service to Osmani International Airport in Sylhet. Biman's operations are assigned the IATA airline code BG and the ICAO airline code BBC, while its call sings is BANGLADESH. The carrier provides international passenger and cargo service to Asia and Europe, as well as major domestic routes. It has air service agreements with 42 countries, but flies to only 18.

The airline was wholly owned and managed by the government of Bangladesh until 23 July 2007, when it was transformed into the country's largest public limited company by the Caretaker Government of Bangladesh. The airline's headquarters, Balaka Bhaban, is located in Kurmitola, Dhaka.

Created in February 1972, Biman enjoyed an internal monopoly in the Bangladesh aviation industry until 1996. 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 operated flights to 29 international destinations as far away as New York City to the west and Tokyo to the east. The airline has suffered heavy financial losses, and has a reputation for poor service because of regular flight cancellations and delays caused by its ageing fleet. Annual Hajj flights, transporting non-resident Bangladeshi workers and migrants, and the activities of its subsidiaries, form an important part of the carrier's business.

Under Skytrax's five-star rating systems, Biman merits two stars. The carrier is currently facing competition from local private airlines & some international carriers, which offer greater reliability and service standards, which is experiencing an 8% annual growth rate, owing to a large number of non-resident Bangladeshis. Since becoming a public limited company, the airline has reduced staff and begun to modernize its fleet. Biman has made a deal with Boeing for 10 new aircraft, along with options for 10 more.

The airline’s Reservation and Departure Control System and other communication systems are fully computerized. Biman is now striving to make the airline more attractive to its valued passengers by fixing priority on providing more comfort and maintaining schedule regularity.

Biman does entire maintenance work on its F-28 aircraft. Biman is also doing C-check, Dcheck 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.

Biman Bangladesh Airlines

[pic]

[pic]

|Founded |January 4, 1972 |
|Commenced |February 4, 1972 |
|Hubs |Hazrat Shahjalal International Airport |
|Secondary hubs |Shah Amanat International Airport |
| |Osmani International Airport |
|Subsidiaries |Biman Flight Catering Centre |
| |Biman Poultry Complex |
| |Biman Airlines Training Center |
|Fleet size |12 (+ 12 orders) |
|Destinations |18 |
|Company slogan |(English: Your home in the sky) |
|Headquarters |Dhaka, Bangladesh |
|Key people |Air Mshl (Retd.) Jamal Uddin Ahmed (Chairman) |
|Website |www.biman-airlines.com |

2.2 History:

Biman Bangladesh Airlines was established on 4 January 1972 as Bangladesh's national airline under the Bangladesh Biman Ordinance. 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. The airline was initially called Air Bangladesh International but was soon changed to its current name.

In modern Bengali, the word biman refers to "aero plane", originating from the Sanskrit word vimāna, a name given to a flying machine mentioned in ancient Vedic literature the logo, painted on the tail, is a stylized white stork inside a red circle.

The initial livery was a dark blue line extending across the aircraft along the windows and covering the tail section. In 2010, Biman went through a rebranding exercise and unveiled a new logo and livery which was applied to its first leased Boeing 777 aircraft. However, following elections later that year, Biman was forced to revert back to the original branding as the new brand image was not endorsed by the incoming government. The bôlaka has also given its name to the Biman headquarters, the Balaka Bhaban.

On 4 February 1972, Biman started its domestic service on the Dhaka–Chittagong, Dhaka– Jessore and Dhaka–Sylhet routes with a World War II vintage Douglas Dakota and Douglas DC-3, both gifts from the Bangladesh Air Force. On 4 March 1972, Biman started its international operations with a weekly flight to London using a Boeing 707 chartered from British Caledonian. 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 Kolkata and Dhaka on 28 April 1972.

In 1983, three Douglas DC-10s joined the fleet and the airline started to phase out the Boeing 707s. The flight network expanded further to include Baghdad (1983), Paris (1984) and Bahrain (1986). On 4 August 1984, Biman faced its worst accident when a Fokker F27 flying in from Chittagong crashed near Dhaka, killing all 49 on board, including Captain Kaniz Fatema Roksana, the airline's first female pilot. 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. 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.

2.3 Vision

To establish Biman Bangladesh Airlines Limited in the aviation market as a world-class airline.

2.4 Mission

To provide safe, reliable, efficient and economical air transport services and to satisfy customers’ expectations while earning sustainable profit and continuing to be a caring employer.

2.5 Objectives

To provide and develop safe, efficient, adequate, economical and properly coordinated air transport services, internal as well as international.

2.7 Organogram:

[pic]

2.8 Manpower:

Manpower status of Biman Bangladesh Airlines Ltd as of June 2010 is given below-

[pic]

2.9 Fleet Information of Biman:

On 4th January 1972, Biman Bangladesh Airlines made its journey with a DC-3 aircraft. After procured two-F-27s, Biman finally took-off on March 7, 1972 with domestic flights to Chittagong and Sylhet from its base in Dhaka. Shortly afterwards, a Boeing 707, joined the airline’s fleet, allowing Biman to begin international flights. By the end of the seventies, Biman had a fleet of 8 F27 and 5 Boeing 707. Biman was serving 7 domestic and 18 International destinations.
The eighties was the era of fleet modernization. In 1983 three DC 10-30 aircraft joined Biman, marking a new era for the airline. In 1989 Biman purchased a new DC-10-30 from Mcdonnell Douglas. Biman started taking out the F-27s from its fleet in phases.
Biman made purchase of two new Airbus 310-300 in 1996. These were two of the last few 310s manufactured by Airbus. The airline operates its own ancillary and maintenance facilities at Hazrat Shahjalal International Airport, where it carries out all maintenance work and C-Checks on DC-10-30s and A310-300s.
In 2012 Biman added two Boeing 777-300ER aircraft. They will replace the DC–10s, which will be phased out by the end of 2013. Biman is looking for leasing more Boeing 777 aircraft, and increase the fleet to 16 aircraft within two years; the Airbus A310s will also be phased out within two years. Biman is also investigating the acquisition of two turboprop aircraft for domestic operations which Biman plans to start in November 2013.

|Type |Regn. No. |Business Seating |Economy Seating |
|B777-300ER |S2-AFO |35 |384 |
|B777-300ER |S2-AFP |35 |384 |
|B737-800 |S2-AFL |12 |150 |
|B737-800 |S2-AFM |12 |150 |
|A310-300 |S2-ADF |25 |196 |
|A310-300 |S2-ADK |25 |198 |
|DC-10-30 |S2-ACP |– |314 |
|DC-10-30 |S2-ACR |– |314 |

2.10 Products/Service Offering:
An airline company mainly sells service. It carries passenger or cargo or both from one point to another point. Biman Bangladesh offers 16 Domestic and 102 International flights through its 13 local and 28 worldwide branch offices. From the last 2 decades Biman carried its passengers by using the following four types of aircrafts:
• McDonnel Douglas Dc-10-30 11
• Airbus Indstries A310-300 series
• Fokker f-28
• British Aerospace ATP

Biman Bangladesh Airlines basically provides two categories of services:
-Domestic Flights
-International Flights

Domestic flights:
Currently Biman has the following domestic flights: • Sylhet • Chittagong • Cox’s bazaar

International flights:
Bangladesh Biman provides 51 departure and 51 arrival fights per week. It has the following
International flights from Dhaka to:
[pic]

2.10.1 Flight Classes:
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. 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. Biman continued to earn additional revenue through all economy operation of its DC10-30 fleet enabling to increase its Economy class capacity by 15%. However, with re-branding initiative presently under process to enhance Biman’s image, operation of DC10-3 fleet will be restricted to selected routes only in the coming daily.
2.10.2 Hajj Operation:
Biman in honored to have the opportunity to serve the Hajj operation. During the fiscal year, it successfully transported 31,700 hajj Pilgrims to Saudi Arabia through operation of 54 hajj flights and also 32 scheduled flights from Dhaka and Chittagong. During the previous year, Biman had transported 29,604 hajj Pilgrims through 40 Hajj flights from DAC-LHR-DAC by other airlines.
2.10.3 Cargo Service
Biman also operates a cargo service using the cargo holds of its passenger aircraft to ship freight to international destinations. It has established Cargo Village at Shahjalal International Airport where the cargo is packaged and labeled before being loaded onto its aircraft. 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 tons 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%. Cargo rates have been improved on many sectors. The bulk carrier baggage ex-Hong Kong carried by Calcutta-oriented passengers and the huge house-hold console shipments from London destined for Sylhet poured huge revenue in Biman’s exchequer.
2.10.4 Direct Service Dac-Lhr-Dac:
Biman has introduced dedicated direct flights on DAC-LHR-DAC route since March 2010. It may also be mentioned that there is no direct flights from DAC-LHR-DAC by other Airlines.

2.10.5 Network:
Biman had 22 destinations in its network including 02 domestic destinations. Due to continuous losses, operation on some destinations was suspended. This initiative decreased losses. With the introduction of additional aircraft, some of the suspended routes have been revived. Operation to New York is expected to resume soon.
2.10.6 New Marketing & Sales Team:
As a part of the re-organization plan, restructuring of the Marketing Department has been undertaken to prepare the airline for the highly competitive market environment. The reorganized Marketing approach places emphasis on revenues from income streams of passenger, Cargo and other businesses.
2.10.7 Introducing Intra-Net and Office Management Software:
With the cooperation of Boeing, Biman has established a PC based Intranet that would enable speedy decision-making. This state of the auto system would take help from different Office Management Software which will make routine decision-making very user-friendly.
2.10.8 E-Ticketing:
After implementing E-ticketing in 2007-2008, within the IATA deadline, Biman continued to achieve improvement in this area, through implementation of Departure Control System in RLIH, JD and CGP, travel with e-tickets from those station were made smoother. Interline Eticketing Agreements were signed with 9 more airlines.
2.10.9 Internet Booking Engine (IBE):
Biman introduced Internet Booking Engine (IBE) for the airline’s reservations and ticketing system. By introducing IBE to the airline’s ticketing system, passengers will now directly retrieve information about airline schedules and able to make booking. Internet Booking Engine (IBE) is an application, which helps travel and tourism industry support reservation through the internet. It helps the consumers to book flights, hotels, holiday packages, insurance and other services online. This is a much needed application for the aviation industry as it has become one of the fastest growing sales channels. With the introduction of Internet Booking Engine (IBE), the airlines, at long last, has been able to make direct exposure to customers, again IBE will help Biman to cut off extra expenses and to support instant booking and payment.
2.10.10 Non-Stop Services By B-77:
Introduction of non-stop services by b-77 on DAC-LON-DAC and DAC-ROM-DAC sectors has helped Biman retain its ethnic markets in the face of stiff competition from other indirect operators. Biman strengthened its position in UK market, as this non-stop service has been proved very popular to the Bangladeshi ethnic community. Operation of B-77 to Singapore and kuala Lumpur for 3 months in fiscal year 2009-10, before utilizing it on London and Rome sectors, helped Biman carry huge labour, tourist and business traffic from different points, specially from Kathmandu.
2.10.11 London- Dubai-Sylhet Direct Flight:
In meeting the long demand of ethnic Bangladeshi passengers, the routing of one of the Sylhet bound flights as London-Dubai-Sylhet direct with Airbus aircraft with higher fares have earned Biman good revenue.
2.10.12 Abacus NMC Bangladesh:
Biman through an innovative approach started GD marketing in Bangladesh- Biman and Abacus formed a National Marketing Company (NMC) for Bangladesh on 09 July, 2002. Certificate of Incorporation was issued by the Register of Joint Stock Companies on 23 July 2003. In Abacus NMC Bangladesh Biman holds 51% share. Abacus NMC Bangladesh business is generated from agents booking on Abacus for all the operating airlines in Bangladesh. It earned substantial profit in every year. During the financial ear 2009-10 Biman earned dividend income from Abacus amounting to Tk. 16,524,000.
2.10.13 Migration of Reservation and SITATEX Services:
Biman used Dumb Terminals for its reservation services for the last two decades. In addition, older version of SITAEX played an important role for messaging services. To upgrade the services, Biman entered into New Generation Network and replaced Dumb Terminals and older PCs for entire network. For doing so, we introduced IP-VPN (Internet Protocol- Virtual Private Network) for network side and replaced desktops by branded PCs. This migration results to access high speed data transfer. At present, it possesses a world standard reservation and SITATEX services.
2.10.14 Airlogica (Data Mining Technology):
Working in partnership with GDS companies is very important. It is equally important to maintain GDS cost at a rational level. Biman has signed an agreement with AIRLOGICA. It uses sophisticated data mining techniques to assist airlines to fully appreciate Global distribution System costs by allowing the user to choose specific reports and perform ad hoc queries.

2.11 Competition:
Pressure from the private sector and the recognition of Biman’s difficulties in effectively serving the aviation market, the CAAB (Civil Aviation Authority of Bangladesh ) has begun to liberalize the aviation market in Bangladesh and to provide authority for new airlines to operate both domestically and internationally.
From the foreign carrier side Biman is facing tough competition in almost all sectors. Especially the mega carriers Saudia, Emirates, Gulf, Etihad etc are moving very fast to occupy the market share of middle east bound passengers. Whereas the Cathay Pacific, Dragon Air, Singapore Airlines, Thai Airways, Malaysian Airlines are the great hurdle for the market of ASEAN bound passengers. Even for the regional sectors the Jet Airways, Indian Airlines, Air India, King Fisher are also becoming big factors to push Biman out of race.
According to government policy some domestic carriers are also spreading their wings internationally. As a result the local market is rolling in triangle motion. The promising private local carriers’ are-
GMG Airlines:
GMG Airlines is a fully owned subsidiary of the GMG Group of companies and commenced schedule service in April 1998. Now it operates a fleet of 3 MD-82, 2Bombardier DASH8 Q100 and 2 Bombardier DASH 8 Q2OO aircraft. It operates domestic services at Dhaka, Barisal, Chittagong, Cox’s Bazar, Jessore and Sylhet. It operates international services to Calcutta, New Delhi, Kathmandu, Kuala Lumpur, and Bangkok. It has two B767-200ER and one B777-300 on order and plans to introduce new international services to Karachi, Singapore, Hongkong, Dubai, Abu Dhabi and Muscat during late 2007 and 2008.
BEST Air:
Best Air is yet another start up airline and is planning to fly both domestically and Internationally (including flights to Bangkok- Suvarnabhumi, Chittagong ,Guanghou, Jaypur, Calcutta and Kunming). Best Air has been operating cargo services for a number of years.
UNITED Airways:
United Airways is a new start up airline that commenced service only in July 2007. It operates through Bombardier DASH 8-100 service from Dhaka to Sylhet and Chittagong and also started operation internationally for Bangkok and Kuala Lumpur.
REGENT Airways:
Regent Airways is a new airline formed in Bangladesh in 2010 by H.G Aviation Limited, a subsidiary of the habib Group. Regent Airways operates 2×Dash 8-300 domestically within Bangladesh.
ZOOM Airways:
Zoom Airways is a cargo airline based in Dhaka, Bangladesh. Formed in 2002 as Z-Airways and Services, the airline operates cargo charter flights in Bangladesh and in the South Asia region in 2005, the airline was renamed to zoom Airways.

2.12 SWOT Analysis:

2.12.1 Strength: • The experienced man power that it is really a good strength of Biman to lead the market .These efficient man power are mostly experienced in the field rather that the literary experts of present days. So if Biman can utilize the potentiality of these force effectively un-doubtfully it will be the emerging tiger of this arena. • Being the National flag carrier, Biman bears the symbol of our independence and sovereignty which is definitely strength of the marketing of Biman. • Strong financial support from government

2.12.2 Weakness: • The main weakness of Biman is the miss management. The management of Biman could never worked independently since the government owned type of organization with having inevitable government influence in almost each and every corporate aspects of this organization and always there was pressure from outside to entertain personal interest. • Even from the very initial period Biman could not be able to recruit or deploy the right professional person for the right place to achieve its desired objectives. This unavoidable government influence .As a consequence Biman has reached at this measurable stage with aging fleet and burden of debts. • At the same time considering the global standard of International Airlines, Biman is lagging behind. The staffs are not provided with modern technologies like Computer, internet facilities etc. Therefore, information flow, faster customer services are not ensured from the part of employees.

2.12.3 Opportunity: • The market is based on labor traffic, retuning residents, business travelers, medical purpose and tourists. The cargo market based on RMG, leather goods, medicine, perishables. The labor passengers have an extreme attraction for the national flag carrier for its home like hospitality. The returning residents also prefer national carrier for home essence. • In terms of cargo, the perishables are mostly dependent on Biman services and also demanded for the RMG. In fact Biman has over flow demand for cargo from Bangladesh. • More over the size of market in Bangladesh is around 3.5 million and 100 thousand tons of cargo which is a quite large aviation to operate for Biman.

2.12.4 Threats: • The main threat is considered the free entry of mega carriers like Saudia,Gulf ,Etihad etc. Currently about 25 carriers are operating to/from Bangladesh. These carriers are mostly modern and have good financial strength and experience in this line. It would be very tough for Biman to survive in the market if Biman does not take necessary actions immediately to restructure the brand. • The local private carriers are also doing well to be threat for Biman. • Currently the fuel price is rising too high for global and as well as there is only one supplier of Jet fuel in Bangladesh which is a major potential threat to Biman.

|Strength |Weaknesses |
|Experienced and skilled manpower |Complex bureaucratic system |
|Have a good brand image in the mind of Bangladeshis |Political influence |
|Excellent hospitability |Unsatisfactory promotion system |
|Huge operational investment |Dissatisfaction among employees |
|It provides both passenger & cargo |Less innovation |
|Services |Back dated airbus |
| | |
| | |
|Opportunities |Threats |
|It provides two types of services passenger |Local & foreign airlines competitors |
|& cargo |Rising fuel price |
|Large market of cargo service | |
|Low price of air tickets | |

2.13 KSF of Biman:
Key Success Factors of Airline Industry
Key success factors (KSFs) describes main parts of performance that are important for the firm to achieve its objectives and mission. Top level management absolutely considers these factors during the setting overall goals. These key success factors give a widespread knowledge for the entire company. Therefore, any action that the firm commences must make sure constantly greater performance in these key parts; if not, the firm may not be competent to accomplish its goals and thus may fail to achieve its mission. In the service/Airline industry, predominantly the capital-intensive, the key success factors are described below: 2.13.1 Strong Management
There must be strong management of everything that is advantageous for the organization. The airline has at all the times evaded, disdained and vogue everything that may increase costs and makes difficult the basic travel plan. Management ranks are inclined, healthy compensated and significantly productive. 2.13.2 Capable Workforce
Highly qualified and competence workforce is very essential in this industry or service-oriented industry. They must possess strong communication skills and soft spoken with customers. There must be training programs focusing to enhance their abilities and skills and these campaigns must be customer-focused and focused on continuous-improvement. Staff must be highly paid so they cannot leave the organization and create difference. 2.13.3 Service Promotions and In-Flight Services
The promotion in this industry is mainly targeted to enhance the base of loyal customers and also focused to the regular high-revenue customers. The in-house service such as booking ease, aircraft type, aircraft seating space, class of service offerings must be at least industry standards. Business travelers like the simple service; there must be a decent coach cabin that is slightly more spacious. There are no assigned seats, no meals, just beverages and snacks. Therefore, simple service is a major critical success factor. 2.13.4 Non-Stop Flying
Destination from one point to another point should be nonstop. This activity minimizes the time that planes take while reaching the destination and it allows airline more to be in the air. It results in good image and increases passengers credibility. 2.13.5 Financial Management
Thriving management of this factor facilitates airlines to regulate investment for growth. There is accountability of the unit revenue to compute the profitability, which is calculated by revenues minus all the expenses divided by the total seats flown. 2.13.6 Efficient Management of Cost
Maximizing revenue by implying creative and competitive pricing structures to attract all the profitable segments and sustaining frequent and profitable customer base is most important key success factor for this industry. Efficient management of cost by focusing on the price hedging during volatile periods and maintaining fuel procurement is an important factor. 2.13.7 Route System
An airline’s route organization is the most reliable factor. Where to fly and how frequently; are the success factors that must be harmonized to demand, and simultaneously planned to increase the aircraft utilization.

2.14 KSF for a company to excel in airline industry:

Keys to Success

In descending order of importance, the critical keys to success for the proposed new regional airline are:

• 1. Employing an experienced, highly professional management team that combines vision; realism; financial ability; solid knowledge of the aviation business; familiarity with, and belief in, the utilization and benefits of the latest aviation, electronic, and informational technologies; on-the-ground knowledge of the region and markets to be served; realization of the crucial importance of an organization's personnel to its success; and a total familiarity with, and commitment to, the overall mission and goals of the proposed new airline. • 2. Intelligent, progressive, and aggressive marketing that identifies the airline as a different kind of player, one that is sharper and smarter, and with a higher level of professionalism and operational standard than is the norm in the target region. Concentration on safety, with highly trained, dedicated, and professional personnel, caring for the passenger and the passenger's needs and wants, the advantages offered by advanced technology, and straightforward, understandable, highly competitive tariffs and fare pricing, all will form key pillars of the marketing strategy. • 3. Identification, through careful market research, of unserved or under-served routes and city pairs in the target market area with sufficient passenger demand to enable high load factors and profitable operations utilizing the category of aircraft envisaged. • 4. Use of an all-jet fleet of newer, modern, Western-built regional aircraft that offer a high level of comfort, safety, and fuel and operational efficiency and flexibility, which meet all normal aviation standards, and which offer sufficient, but not excessive, passenger and cargo capacity on the envisaged routes. • 5. Use of advanced electronic and information technology to reduce staffing and other operational costs; expand the potential market base; readily capture sales opportunities; simplify and speed passenger, baggage, and cargo handling; and enhance customer convenience and satisfaction.
Additional important, though less critical, keys to assuring the airline's success include the following:

• Identifying, negotiating, and entering into, in the pre-operational stage and early on, beneficial associations, cooperation’s, and partnerships with larger, more established, highly regarded carriers both within and beyond the target market region to offer interline arrangements, through fares, frequent-flyer mileage sharing, and convenient hubs and long-distance onward connections to passengers. Successful execution of this element of the business plan is crucial to the overall success and growth of the airline, and must be kept in mind in the organizational plan and structuring of the airline. • Establishing a high level of operational oversight and quality control that will ensure that the airline always lives up to its marketing commitments and fulfills the promise of a high level of service, customer satisfaction, convenience, and safety, at a reasonable, highly competitive fare. • Avoiding the temptation to go head-to-head with established carriers on routes that already are well-served, unless solid evidence exists of additional, significant pent-up demand, or widespread customer dissatisfaction with existing services. • Maintaining flexibility that enables the airline to always respond and adapt to changing market conditions and opportunities, without being erratic, and employing equipment, scheduling, and staffing on a basis that is sufficient to get the job done properly, efficiently, and at a high rate of return, without "overkill" or fielding costly excess capacity or, conversely, unduly cancelling scheduled flight operations. • Identifying, developing, and quickly and cost-effectively exploiting opportunities for new markets, new market concepts, and expanded sales potential. • Supplementing regularly scheduled passenger service with both regularly scheduled and also special cargo services when and where sufficient demand exists, and also with seasonal, peak-period, and other intermittent passenger services on certain key regional, seasonal, and variable routes where very high load factors can be predicted despite existing but lower-quality competition, or where competition cannot meet the demand. Larger, longer-range, or specialized aircraft may be employed on a charter or wet-lease basis to provide these supplemental, but potentially highly profitable, passenger and cargo services. • Looking to combine the core aviation business with ancillary marketing concepts and activities and ground-based operations that support, supplement, and complement the aviation elements of the business, including such activities as package-, group-, and charter-travel program offerings; value-added sales and customer services, both land- and Internet-based; construction and operation of enhanced passenger-, baggage-, and cargo-handling facilities and services; and other logical business pursuits both within and outside the immediate aviation business. • Avoiding growth for growth's sake, and instead looking for solid niche-enlargement opportunities that will allow incremental, but always profitable, expansion.

2.15 Operational Performance:

The Directorates of Biman Bangladesh Airlines Limited observed that the company has made a consolidated loss of Tk. 80.14 crore during the year 2009-2010. During the financial year 2009-2010, Biman has earned a total revenue of Tk. 2,913.60 crore including revenue from hajj Operation of Tk. 290.1 crore. During the previous ear 2008-2009, it was Tk. 3012.82 crore including revenue from Hajj operation of Tk. 298.82 crore. Passenger revenue contributed about 77.87% of total operating revenue of the airline. Cargo and Express-Baggage contributed 8.22% and 1.27% respectively. It may be mentioned here that due to capacity constraints, Biman could not fully exploit the cargo market opportunity. Biman has brought cargo under automation, and other modern marketing mechanism has also been set to optimize revenue with the planned fleet enhancement. Due to aged aircraft and fleet constraints even with leased aircraft during the 2nd half of the air, Biman failed to achieve satisfactory level of schedule regularly during the period under review. With a view to Fleet modernization, Biman has signed agreement in April & May 2008 with Boeing for procurement of 10 new generation fuel-efficient aircraft. Other strategies have been taken to overcome existing fleet constraint, efficiency enhancement and image building. One 777-200 aircraft are expected to join the fleet in January 2011
Key Performance Indicators:
Available Seat Kilometer (ASK) In Lakh
Domestic 503.05
International 68,285.30
Total 68,788.35
Revenue Passenger Kilometer (RPK) In Lakh
Domestic 276.00
International 49,995.91
Total 50,271.91
Number of Passengers
Domestic 113,813
International 1,297,676
Total 1,429,489
Cabin Factor in Percentage
Domestic 55%
International 73%
Total 73%
Available Ton Kilometer (ATP) In Lakh
Domestic 61.07
International 10,531.60
Total 10,592.67
Revenue Ton Kilometer (RTK) In Lakh
Domestic 29.65
International 6,690.24
Total 6,719.89
Load Factor In Percentage
Domestic 49%
International 64%
Total 63%
Cargo Carried ( CGO & Mail) In Ton
Domestic 96.96
International 28,651.08
Total 28,748.04
Number of Flights
Domestic 2,222
International 6,292
Total 8,514
Block Hour
Domestic 1,456.10
International 29,823.41
Total 31,279.51
OPERATING RESULTS:
During the FY rear 2009-10, Biman Bangladesh Airlines Ltd has achieved the following operating results-
Operating revenue: Tk. 29,136,061,492
Non-operating revenue: Tk. 300,179,418
Total revenue: Tk. 29,436,240,910
Total expenses (Operating, non-operating & interest): Tk. 30,237,603,824
Net profit/Loss: Tk. (801,362,914)

Financial Ratios & Highlights:

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Chapter 3

3.1 Bangladesh Airline Industry:
The growth of international traffic and tourism to/from Bangladesh is facing continued challenges in 2011. National flag carrier Biman Bangladesh Airlines is reportedly on the verge of bankruptcy, weighed down by a considerable debt burden. Bangladesh is also struggling to upgrade its infrastructure and tourism facilities to attract international visitors, with inbound tourism remaining flat in 2010. Due to the poor performance of domestic airlines, foreign carriers have been driving the expansion of the international market to/from Bangladesh, to control over 80% of the market, according to United Airways. And despite a market environment that should support low cost carriers (LCCs), development on this front has been limited with only 7.5% of Bangladeshi capacity being operated by LCCs, according to Innovata.

3.2 Bangladesh capacity (Average seats per week, to/from/within) by carrier:

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3.3 Bangladesh international capacity (average seats per week as % of total) breakdown:

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3.4 Bangladesh International Capacity by Region:

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3.5 Bangladesh International vs Domestic Capacity Share:

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3.6 Analysis of Airline Industry on the Basis of forces influencing the Industry Environment.
While analyzing the industry standard and environment driving forces of the market have been identified on the basis of porters five forces model which is shown below.

3.7 Start-up Summary
Most of the planned start-up costs are apportioned to the following six areas, in approximately declining value: 1. Dry leasing or purchasing three (followed by two more by the end of the first year of operations) mid-to-large-size regional jet aircraft, most likely the 99-seat British Aerospace Avro RJ100 (or the older predecessor to the RJ100, the BAe 146, which also offers a quick-convert passenger-cargo version), or the 85 - 99-seat Avro RJ85, or the next-generation follow-on versions of those two Avro jets, the RJX100 or RJX85.

2. Provision of a sufficient cash reserve to assure timely payment of the leasing or finance payments and operating costs of the aircraft through at least the first six months of operations.

3. Marketing, advertising, and public relations costs, including costs of setting up a website capable of offering flight and fare information and making online sales and reservations, and related Internet marketing, as well as conventional print and broadcast advertising, and public relations activities.

4. Costs associated with recruiting, training, and certifying flight and ground operational crews.

5. A reserve to cover overall operating costs, aside from aircraft operating costs, over at least the first six months of operations.

6. Administrative and legal costs incurred in setting up the business and the airline operations.
Assumptions governing start-up costs are shown in the following table and chart.

|Start-up Requirements |
|Start-up Expenses | |
|Legal and consulting | |
|Route and market study | |
|Office supplies, stationery etc. | |
|Brochures and marketing materials | |
|Design consultants | |
|Corporate insurance | |
|Office rent | |
|Software and systems development | |
|Expensed equipment and off. furniture | |
|Expensed vehicles (8) | |
|Public relations and advertising | |
|Crew, staff training and manuals | |

Company Locations and Facilities
Financial, traffic, and other studies currently are underway to determine the optimal prime basing location for the proposed new airline.

3.8 Services

As demonstrated throughout this business plan, it is clear that a strong growth potential exists for the future, and the airline will gear itself toward sensible, well-based growth and solid financial and business planning.
The proposed new airline has the potential to become a strong, well-established, and - as the numbers indicate - extremely profitable carrier, starting from now.
3.8.1 Service Description
In reviewing the planned services to be offered by the proposed new airline, this plan will divide services into two main categories: passenger services and cargo services. Within each category, the service strategy, as well as general services to be offered, are presented and reviewed.
3.8.2 Competitive Comparison
In comparing the proposed new airline to its competitors, there are at least two levels of comparison that must be considered; the usually lower-standard airlines and the higher-standard.
Beating the former source of competition is both a reasonable and an essential goal. But comparing favorably, and even standing notably above, the latter also is an important objective since these airlines will represent direct competition to the new airline on many of its projected key routes, despite efforts to avoid such competition to the extent feasible.
Fortunately, several of the key distinguishing characteristics planned for the new carrier not only will enable it to fare extremely well in both levels of competitive comparison, but will actually be achievable at a savings in cost and resources. In other words, by being smart, the new airline can be significantly better than its competition while at the same time accruing lower overall costs, a remarkably good combination.
In comparing the proposed new carrier to competition, it is important to look at those factors that determine how most travelers choose an airline. They include the following (and the order of importance is different for each traveler and each situation, but the most important factors are listed): • Safety, actual and perceived; • Cost, and range of fares offered; • Destinations served; • Availability of seats; • Availability of fares; • Convenience of flight schedules, times of arrivals and departures; • Frequency of flights; • Connections, including reliability and convenience of connections; • Nature of flights: non-stop, direct, number of stops, aircraft changes; • Availability of different classes of service; • Onboard comfort, service, meals, and amenities; • Type of aircraft, including jet or non-jet, size, and speed; • Age and condition of aircraft; • Ease and efficiency of reservations and ticketing; • Reliability and on-time departures and arrivals; • Ground service; • Reliability and quality of baggage handling; • Friendly, competent service in reservations, check-in, and in the air; • Overall reputation of airline; • Nationality of carrier; • Factors of personal preference.
While no airline probably can excel in every one of these areas, the closer an airline comes to "excellent," or at least "good," ratings in each of these key areas, the better it will fare in its competitive standing.
Both in the overall design of the airline and its basic operational features, as well as in its management, quality control, and day-to-day operations, the proposed airline is expected to stand out positively in almost every regard.

Service levels are poor in general, among both scheduled and charter carriers, which represent a significant part of the market, particularly in service to the niche markets identified for the new carrier.
By utilizing modern, safe, reliable, and cost-effective Western-built regional jet aircraft, the proposed new airline will offer a far more attractive alternative to the traveler both from within and outside the country, and will be able to operate with far lower fuel and maintenance costs than the competition.
The comfort, reliability, speed, and safety of the new airline's aircraft all will enable it to be the airline of preference for virtually all business, government, and organizational travelers from both within and outside the target region when traveling to or within the region, and it also will be preferred by most leisure and personal travelers, including those from with the target region, as well.
Greater reliability and punctuality of the aircraft, augmented by state-of-the-art navigational devices that permit operation under a wider range of weather and visibility conditions, will enable the airline to compete most favorably on those bases also, and will ensure the least likelihood of flight cancellations, postponements, and missed or late connections.
On the basis of fares, the new airline will offer highly competitive fares which, in many cases, should be below those offered by its competitors. Higher load factors, combined with greater efficiency both in operational costs as well as in reservations, ticketing, and check-in, will enable the new airline to be highly competitive from both a cost and a quality perspective, and will also enable it to retain a higher percentage of its revenues.
Finally, the new carrier will be seeking out, as part of its business and marketing strategies, routes and city pairs that offer unserved or under-served demand. That strategy also will help reduce the threat from competition, and will enable the carrier to further establish itself as the carrier of choice in Bangladesh.

Requirements for interline arrangements
In order for the new airline to be able to obtain the interline arrangements such as code-shares, interline fare agreements, frequent-flyer mileage sharing, and so forth, that will be so important to its competitive posture and overall success, it must: • Fly Western-built aircraft, preferably pure jet. • Meet the standards to have a two-letter airline code. • Meet the highest standards for safety, reliability, and service. • Be accessible through normal reservations and ticketing systems.
Meeting these requirements, and negotiating the desired agreements, will be priorities from the outset in setting up the new airline. Additionally, partnering and interline arrangements will be carefully identified and sought that will offer the new airline strategic partnerships that will help give it the "cover" of larger, more established carriers, and also the status and service and growth potentials it will need to grow beyond its initial stage and to become a true presence in the aviation world.
The primary issue regarding sourcing is the question of the type and source of aircraft to be employed in the new airline's fleet.
Aircraft selection
Several potential fleet aircraft and manufacturing sources are being considered and evaluated, including the following: • Airbus Industrie ATR72, A-300, A-310, A-320 • Boeing 717, 737-500, 737-700 • Bombardier Canadair Regional Jet CRJ • British Aerospace BAe 146-300, BAe 146-200QC*, Avro RJ85, RJ100, RJX85, RJX100 • Embraer ERJ-145 • Fokker 100 • Saab 2000 • Also, in an all-freighter configuration, the BAe 146-200QT** and BAe 146-300QT**
* QC = "Quiet Convertible" version allowing quick-conversion from passenger to full-freighter configuration; only five of these - the complete production run - currently are in service worldwide.
** QT = "Quiet Trader" all freight version, of which in service there are 13 in the 200 version and 10 in the 300 version.
With the exception of the turboprops ATR72 and the Saab 2000, all aircraft under consideration are pure jets.

A number of key factors have mitigated toward the BAe Avro RJ family of regional jets rising toward the top of the list as the probable aircraft of choice for the new airline. Among those factors are the following: 1. Relatively low per-seat acquisition cost.

2. Relatively low per-passenger-mile costs, given their added capacity over smaller regional jets, and high reliability factors in the newer versions.

3. Complete pilot and maintenance inter compatibility between the various members of the family (RJ70, RJ85, RJ100, and now the new RJX family as well), giving added flexibility in flight and maintenance operations and reducing training and simulator costs.

4. Four-engine configuration which gives it an added safety factor (it will increase operating costs).

5. Spacious, comfortable cabin interiors that offer the only seat, aisle, and overhead bin dimensions available in a regional jet that are equivalent to those on standard-size jets.

6. The option of flexible cabin and seating configurations that allow for varying the number of seats provided for various classes depending on demand, the number of seats abreast, types of seat coverings, the number of seats provided on a given flight, and so forth.

7. Availability of the aircraft from various sources on both lease and purchase bases.

8. The possible option of obtaining advantageous British export financing.

9. Ability to service the aircraft in many locations on the projected service network and the availability of major overhaul capabilities within the country.

10. Widespread passenger and industry acceptance of the Avro regional jets both within and outside the country.
Seating capacity is an important consideration both from the point-of-view of capacity, load factors, and per-passenger-mile costs, but also from the point-of-view of "scope clauses" in pilot union contracts.
Key operating parameters for both the current and new series of Avro jets (85 and 100) are given here:
|Aircraft type |RJ85 |RJ100 |RJX85 |RJX100 |
|Seating |85-100 |99/100-112 |85-100 |99/100-112 |
|Cargo Capacity (m3/ft3) |18.25/645 |22.98/812 |18.25/645 |22.98/812 |
|Range (km/nm) |2796/1510 |2554/1379 |3296/1780 |3019/1630 |
|Maximum Speed (kt) |MO.73/300 kt |MO.73/305 kt |MO.73/300 kt |MO.73/305 kt |
|Runway for 740 km (m/ft) |1157/3796 |1314/4311 |1105/3625 |1275/4183 |

3.9 Technology
Flight may be based on aerodynamics, but the proposed airline will be based on technology, and lots of it. Efficiency and convenience through use of the most up-to-date informational and electronic technologies, in addition to modern aviation and navigational technologies, are guiding principles of the proposed new airline. Technology will also be a cornerstone of the new airline's marketing strategy.
Among the technological features the new airline will offer are: • Internet marketing and online reservations (e-reservations) and sales (e-sales) that will provide quick and easy access to airline schedules, flight availability, reservations, and ticketing to a wide range of customers worldwide. This eliminates payment of agency commissions and keeps costs low - savings that can be passed on to the customer. • Electronic ticketing (e-ticketing) which will enable passengers to obtain their tickets online and avoid the need to obtain paper tickets from airline offices, travel agencies, or at the airport. It also frees the airline from having to stock, track, and issue tickets and maintain paper trails of them. Again, more savings for both the airline and the customer. • Electronic check-in (e-check-in) that will virtually eliminate waiting in line to check-in for e-ticketed passengers, enabling them to confirm their identities, obtain their boarding passes, and check-in their baggage (and even purchase tickets upon check-in) utilizing a user-friendly kiosk that eliminates those last-minute frustrating waits to get to the counter. And it also greatly reduces the airline's needs to staff check-in desks, control long lines, employ local contract ground staff, and expend money and resources on an antiquated system that only adds to the traveler's inconvenience and frustration. Another win-win situation for both airline and passenger. • Electronic baggage tracking (e-baggage tracking) which will enable the airline to track any piece of baggage from check-in to final pick-up and claim. If courier services can track parcels as they move around the world, and enable customers to track their parcels using tracking numbers and online tracking systems, then why can't the same system be used to assure that no passenger will ever again have to wonder where his or her baggage might be? There may still be contingencies (such as late check-in, lack of space, security restrictions, late connections, and so forth) that cause baggage not to be placed on a given aircraft, but at least both the airline and the customer can be assured that they both know exactly where the given item of baggage is at any moment, and when it might be expected to arrive at the destination. This could well be an exclusive feature of the proposed new airline since no other airline appears to be utilizing it at present. • Electronic cargo tracking (e-cargo tracking) is the same basic idea as e-baggage tracking, and will use the same basic system, only for tracking cargo and parcels. • Electronic quality control (e-QC) is another innovation that will enable technology to create a far better flying experience for the customer, give airline management and staff greater control over airline operations and performance, and save time, effort, money, and staff resources in the process. What is envisaged is a central electronic matrix that controls and monitors scheduling of aircraft, equipment, personnel, supplies, and support materiel, and responds to problems, excesses, and deficiencies.
It also will track all elements of a given passenger's or customer's transactions and interactions with the airline, from initial flight inquiry through reservations, ticketing, check-in, flight, connections, and final baggage pick-up, claim, and check-out, as well as any standing preferences, follow-up comments, inquiries, or problems. It also will monitor things like weather conditions, flight delays or projected delays, gate jam-ups, and other contingencies, and will automatically notify both appropriate airline personnel as well as passengers and customers of any advisories, warnings, or changes.

• Electronic financial control (e-finance) will enable complete electronic financial control and monitoring of the airline's finances, clear advantages. • Additional technological features will be incorporated on-board the aircraft to provide flight crews with the latest navigational and communication technologies to assure the highest level of passenger safety and also airline reliability and punctuality. Included in this technology, in the case of the Avro aircraft, is all-digital ARINC 700 avionics with advanced Cat IIIb low weather-minimal landing capability to permit landings under the poorest permissible approach and visibility conditions.

3.10 Market Segmentation
A complete market analysis and segmentation will require a specific passenger and destination survey, the cost of which is included in the Start-up Costs for the airline.
Preliminary analysis (based on a variety of methods, including observation, interviews with travel- and airline-industry professionals, economic segmentation, future projections based on marketing plans, and experience with the region and market) for planning purposes, however, indicates the following approximate market segmentation overall (considerable variations, of course, would be anticipated depending on route, season, and other factors): • Business - 20% • Government and International Organizations - 15% • Regional Resident Personal and Leisure Travelers - 30% • Diaspora Personal and Leisure Travelers - 15% • Seasonal Holiday Travelers - 20%*

3.11 Strategy and Implementation Summary

The airline's strategy has already been adequately explained elsewhere in this plan: target unserved and under-served markets, seek out niches and unmet demand, and offer a higher level of service and a higher standard than the competition. The airline will utilize technology to reduce costs and offer better service and greater convenience to the passenger.
In this section we'll examine how the new airline will go about cutting out its niche through its marketing strategy.

3.11.1 Marketing Strategy
The proposed new airline intends to cut out new territory as it goes about marketing itself. While it will clearly serve the target markets of Domestic & International, it will just as clearly be a different kind of player on the field, and will seek to be known not only as a Bangladeshi airline, but at the cutting edge of the aviation business.
The airline's emphasis on the latest information and electronic technology, and its stress on comfort, convenience, safety and customer service, will be cornerstones on which the marketing strategy will be built.
The airline will utilize a combination of methods to achieve the recognition that it both desires and needs. A fairly large advertising budget is planned to buy the space and time to get its name and message in front of the largest possible group of potential customers that it can. Given the crowded field of regional airlines, it is better to come on like a lion than a lamb, or you may be lost in the herd.
The airline will also utilize public relations to good advantage to extend and supplement its advertising budget.
There are a number of "hooks," aside simply from its newness, that the airline can utilize to get the media's attention. The airline is opening up new markets, and it also is transcending the technological barrier with the latest technology in the business. It has big ambitions, but knows that it needs to serve the customer first to realize them. And it wants to know and serve its markets better than anyone else.
Everything about this airline, from its name to its colors, from the look of its planes to its airport kiosks, from its smart but informal crew uniforms to its advertisements and literature should set it apart. And it costs little more to do things freshly and smartly than the more ordinary way of doing things. An organization is new only once in its life, so the airline should grab that opportunity and get all the attention it can at the outset. And it needs to have both an adequate budget, as well as an outwardly directed management, to achieve that end.
The new airline will become known as one where all the staff practice the motto, "We have a job to do, and we do it every day - for you!""

3.11.2 Pricing Strategy
Like everything else about it, the new airline's pricing strategy will also set it apart from the pack and will form a key aspect of its overall marketing strategy.
It is almost a stock joke, the unwieldy and impenetrable forest of airline tariffs and fares and promotions (often available for something like three seats on a flight - and that is meant to win customers) common in the industry today. Few things have garnered the notoriety and degree of customer suspicion and dislike that airline pricing has, and yet there are few moves afoot to improve the situation.
We intend to change that, and will not only make our business more predictable and "user-friendly" to the passenger, but also will help fill our planes and make our financial direction more predictable and clear to our management and our bankers as well.
The game plan is simple enough, offer customers good service to places they want (or need) to go to, and at a fair and predictable price. Competition on the basis of price alone has spelled disaster for more than one carrier and once down that slippery slope it is hard to turn back. And while price is clearly an important factor driving the marketplace, it is by no means the only one. It will not be our aim to be the lowest-priced competitor in the market (though we may be on occasion). Nor will we seek to be the highest priced, either. Fairness, clarity, and a rational fare basis, combined with better service and greater convenience than offered elsewhere, will be our guiding principles.
Essentially, we will work from only two sets of fares (existing for market segmentation purposes) for our service: • Weekday fares, in both Value and Premium (aimed primarily at business travelers who are willing to pay a higher price to be able to go and come back during the week). • Stay-over weekend fares, in both Value and Premium (aimed more at the personal or leisure traveler for whom price is more important than traveling mid-week).
The only variations on those fares (not new fare bases) will be these: • Set, publicized discounts for early reservations and purchasing tickets in advance. • Set, publicized discounts for reserving and ticketing online, electronically. • Seasonal and certain peak-period adjustments to the basic fares, or adjustments due to spikes in fuel prices and the like. • Infant and child discounts based on the original fare (up to free in the case of infants). • And possibly a stand-by fare (call it the "Gambler Fare") for people who are willing to take what's available at the last minute (helps us fill seats, helps them get on a nearly full flight, and it does not have to be radically discounted from the normal fare - probably no more than 15 percent discount - since the normal fare will be just that, a normal fare, and not some outrageously priced gouger).
Given our stress on electronic reservations and ticketing, most tickets will be paid for in advance of the departure date, which means the new airline - again, as part of its marketing strategy and offering a higher level of concern for the traveler - should avoid the common and much detested practice of overbooking. This also is where stand-bys can help fill any voids that may occur.
In addition, fares for the most part should be based on some rational system that is calculated on distance and actual costs, and not simply what the market will bear. One must wonder how much legitimate business is lost to the industry simply because many passengers cannot and will not pay the near-equivalent of a round-the-world fare only to go between two neighboring countries.
Here is an example of how this user-friendly fare system will work: • Value Fare is $XXX for weekday round-trip travel. • Value Fare is $XXX - 20 percent for Saturday stay over round-trip travel. • Value Fare one-way is one-half the round-trip cost of $XXX + 10 percent. • Premium Fare is Value Fare plus 30 percent (for any category. So you can stay over Saturday and travel Premium for only 10 percent more than the regular weekday Value fare - this will help fill Premium seats and get people used to the idea of traveling Premium during the rest of the week, too). • Reserve and pay for your ticket on the airline's website, and receive a 5 percent discount on whatever the fare is (a lot cheaper than paying a 9 or 10 percent commission plus reservation-system handling charges, and it gets the customer to be e-ticketed, other advantages for the airline as well as the customer.). • Reserve and buy your ticket up to 30 days in advance, and take another 15 percent discount. Or reserve and buy your ticket up to 14 days in advance, and take a 10 percent discount. Up to seven days in advance, and a 5 percent discount. So essentially, the maximum discount is 40 percent (20 percent for Saturday stay over, 15 percent 30-day-advance purchase, and 5 percent online reservations and ticketing. Predictable for the traveller, predictable for the airline). Fly Premium weekends and reserve 30+ days in advance online, and you fly at 10 percent less than weekday Value fare - another marketing hook. And since the basic fare will be a "fair" one, the airline will not be staging loss-leaders even with the steepest discount. But no one is likely to complain about the fare, either. • Go non-stop, or make connections if you need to - no penalty if you don't disembark at the interconnect and if the fare to the interconnect point is equal to or less than the fare to the passenger's stated destination, as it would be in most cases. Otherwise the higher fare is charged to eliminate the argument (it's all in the computer's database). • And that's it. Unless there is an adjustment for seasonality or other special conditions. No impenetrable forest of fares. Few promotions needed (though they might be used from time-to-time). No reading the small print on the back of the ticket or trying to make out the "fare basis" (except maybe for those through tickets connecting to or from another carrier). How can the customer not love it? The only real danger is that it could set a new trend for the industry.
3.11.3 Promotion Strategy
The overall concept and design of the airline sets the stage for its promotion. Marketing and promotion will stress the unique qualities of the airline and the points that set it apart. Strong public relations combined with well-placed, well-designed, distinctive advertising appealing directly to people who are the airline's prospective customers will help get the word out.
Special effort must be made to develop and operate a highly functional, fast, rock-solid, and user-friendly website for online information, reservations, and e-ticketing. Internet marketing, combined with conventional non-Web marketing, will steer people to the website. The more customers use the website, the easier and more pleasant the experience will be for them, and the more economical and efficient, and predictable, will be the process for the airline.
Special attention will be made at the outset to reach the trend-setters and opinion-leaders in our various target markets, even going so far as to arrange personal meetings between airline executives and marketing directors and those opinion leaders, or who deal or otherwise have a close connection to the target region.
While in general, special promotional fares and the like will be limited, the airline may consider launching with a special promotion simply to get known and to "get off the ground" with planes that are not mostly empty, as is often the case with new airlines. Overall, management and the sales and marketing department will coordinate closely and will employ outside consultants as need be to assure the most positive possible launch.
Sales Strategy
The airline's sales strategy will flow from its overall concept and marketing approach. Mass marketing, but with a personal touch utilizing airline employees as spokesmen and women to explain that "I have a job to do, and I do it every day - for you!", will aim to steer as many people as possible either to the airline's website, or to its telephone-based customer-service representatives. While clients are free to utilize their own travel agents, and the airline may also want to be accessible through general travel sites such as Travelocity, the more customers that can be encouraged to use the airline's own reservations and ticketing services, the less revenue will have to be shared in the form of expensive commissions.
E-reservations and e-ticketing, combined with e-check-in, make the most sense for any customers who have online access, and also for the airline itself. But nonetheless, the airline must not lose sight of the fact that many people do not have access to the Internet, or do not care to use it to arrange their travel, or perhaps just prefer a more personal touch, and so other means of access must always be readily available.
The regional and specialized sales and marketing managers, as explained in the section on Personnel, will concentrate their effort on targeting specific clients that have the potential to offer corporate or group travel (including contract arrangements), or who are potential air-cargo customers. The airline will not have the resources to field a large sales team, and so these regional managers must target their efforts, and the airline must effectively utilize its mass marketing methods as well as the Internet to attract individual travelers who, once they experience the new airline, hopefully will feel a close affinity toward it and will become loyal and happy customers.

Bibliography
Biman Bangladesh Airlines Limited, Annual Report, 2010.
Biman Market Research Department, System Performance, 2010.
Hasan R.(2007), Biman turns public limited company, Dhaka, The Daily Star
Hasan R. (2007), Biman at height of flight disarray, Dhaka, The Daily Star
Hasan R.(2007), Biman offers its staff’s voluntary retirement, Dhaka, The Daily Star
Rodwell Julie F. (2009), Essential in Aviation Management: A Guide for Aviation
Service Businesses (6th Edition), New York, Houghton Mifflin Company,
ISBN-078-72-976-23
http://www.biman-airlines.com http://www.airlineroutemaps.com http://www.planespotters.net/Airline/Biman-Bangladesh-Airlines. http://www.ti-bangladesh.org/research/EX_Summary_Biman_Eng.pdf http://www.airlinequality.com/Airlines/BG.htm. http://www.wikipedia.en -----------------------
Competitive Rivalry

Threat of New Entry

Buyer’s power

Sellers Power

Threat of substitute

➢ Threat For new entry:

➢ Initial setup and running capital is very high

➢ Training not easily aval

➢ Experience needed

➢ High regulation from govt and regulatory body

➢ High switch over cost

➢ Tech protected (Joint venture/ R &D reqd)

➢ Barrier to entry is high

➢ Fare has come to have reached economies of scale

➢ Cost benefit requires long re- investment

Sellers power

>Few number of suppliers mostly from abroad and recently few local.

>Substitute is very few.

> Suppliers power high.

> very few number of quality food and other svc suppliers

> Fuel supply monopoly

Buyers power

Buyers power

➢ Homogeneous product

➢ Buyers has less control over price

➢ Low buyers power

➢ Ability to switch over is less

➢ Low buyers power

➢ Ability to switch over is less

Threat of Substitute

➢ Threat of substitute is low for domestic route and high in international and regional route

➢ New substitute is coming up very slowly-

➢ Some cross product substitutes are very rare

Competitive Rivalry

Moderate competition in market structure

Switching cost is low due to more number of brand ( more than 3000)

Low customer loyalty due to more number of brands

High cost of leaving market