While indulging in a favourite Bengali pastime—watching a late-night talk show with my father—the discussion turned to Bangladesh Biman’s plans to buy more aircraft.
The guests lamented Bangladesh’s reliance on foreign airlines, with travelers connecting through overseas hubs to reach their destinations. Their prescription was more planes of our own.
Private Bangladeshi airlines were missing from the discussion. Noting that these carriers are also domestic assets and that officials claim there is substantial unmet demand, the text suggests the government should examine the factors preventing private carriers from serving it.
A recent US-Bangla ticket from Chittagong to Dhaka provided an initial example, with a base fare of Tk2,924. Additional taxes, fees, and an airline surcharge totaling Tk1,625 brought the final cost to Tk4,549.
The author noted that their ticket listed these various charges as codes. They added that a National Skills Development Authority ticketing guide helped decode them.
Passengers should pay for the airport facilities and security they use, through transparent fees tied to efficient service costs.
A broad consumption tax also has a different justification from selectively taxing flying. However, the excise and travel taxes alone added Tk900, which accounts to 30.8% of the base fare.
Where did this extra tax bill come from?
Under the Excises and Salt Act, the government holds the authority to levy excise duties on specified domestic services. Fixed passenger duties apply the same charge to both inexpensive and expensive tickets. If an airline reduces its fare, the duty remains unchanged, thereby claiming a larger proportion of the lower price.
The government imposes heavy taxes on tickets, which discourages sales and squeezes the profit margins that could otherwise help finance private expansion.
The government then guarantees borrowing for Biman, resulting in a double whammy for the public: passengers pay more currently, while taxpayers assume the risk if the guaranteed debt remains unpaid. Before underwriting additional aircraft, the government ought to reduce the tax burden and allow airlines to test whether passengers will support the expansion.
If officials want passengers to choose Bangladeshi airlines over foreign carriers, they should begin by making it easier for private Bangladeshi airlines to compete.
Local carriers have warned that reducing the ticket-tax burden would be one place to start, as higher duties depress demand.
Ticket taxes are also applicable to Biman. However, government-backed borrowing alters the party responsible for bearing the risk of expansion.
When lenders expect the state to cover a shortfall, they have less reason to scrutinize whether new routes will pay. Managers also face weaker pressure to make those investments earn their keep.
A guarantee can make aircraft easier to finance without making them commercially worthwhile. Government backing can keep resources committed to an airline that would otherwise have to improve, restructure, or relinquish them to a better operator.
Boeing has confirmed 25 aircraft ordered this year; Airbus announced ten more on October 7.
Bangladesh may need additional capacity. Biman should still demonstrate which routes justify the investment, how debt will be repaid, and whether leasing or competing carriers could provide service more economically.
For the initial 14 Boeing aircraft, the US ambassador announced US Export-Import Bank financing. A sovereign guarantee has also been reported.
If Biman defaults on guaranteed payments, the state must meet its obligations, adding pressure for taxes, borrowing or cuts to other priorities.
According to CPD’s FY2026‑27 budget analysis, roughly Tk6,257 crore in guarantees linked to Biman are recorded as contingent exposure, not as an annual subsidy payment or a valuation of the airline’s new orders.
If Biman fails to repay the guaranteed debt, the government must pay. Whatever it cannot recover from Biman becomes a loss for taxpayers.
Commercial expansion should depend on passengers buying tickets and investors accepting the risk. Before asking taxpayers to back more seats, the government should make existing seats easier to buy.
It should not impose taxes simply because it can. Each levy needs an economic justification that accounts for the costs it imposes.
Revana Sharfuddin is a research fellow at the Mercatus Centre at George Mason University.
Why it matters
Heavy ticket taxes and state financial guarantees for Biman increase passenger costs and expose taxpayers to significant fiscal risks.