Vision

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

airline.”

Mission

“To serve people with safe, reliable, efficient and economical air transport services and to

satisfy customers’ expectations while earning sustainable profit and continuing to be a

caring employer with being responsible towards our society.”

Slogan

“Your Home in the Sky”

Executive summery

Biman Bangladesh Airlines Limited is a public limited company whose 100% share

has been owned by the Government of Bangladesh. Biman was established with a slogan

“Your Home in the Sky” and it started its operations from January 4, 1972 as a

corporation with 2500 skilled and unskilled manpower. It started functioning by taking

over the assets and liabilities of the erstwhile Pakistan International Airlines (PIA) within

the territories constituting Bangladesh. Biman started its international flights soon after

receiving one Boeing 707 and two Fokker F27 friendship aircrafts. After that various

kinds of aircrafts were included in the fleet. Later, on 23rd July 2007, Biman Bangladesh

Corporation has been converted into Public Limited Company with financial autonomy.

Biman Bangladesh Airlines Limited is very much financially able to run its business.

The authorized capital of the Airline is Tk. 7,500.00 million while the reserve is Tk.

3,299.30 million. The airline has a total asset base of Tk. 14,224.00 million. The airline

earned profit of Tk 24.9 crore for the year 2008-09 compared to Tk. 9.85 crore for the

2007-08. Based on the assets, in terms of calculable assets, manpower, intelligence-

network and the market, existing and potential, Biman Bangladesh Airlines Limited is in

the very serious business of creating the competencies to capitalize on the opportunities.

In this project, we have tried to focus on the whole business situation and the

potential market condition of Biman Bangladesh Airlines Limited. As a business entity,

Biman has an obligation of making profits and obtaining customer satisfaction. But in the

last decade, those two sectors have been seriously affected which has distorted the image

of the company. We have tried to analyze the company’s system to diagnose the

problems regarding these matters. In addition to that, for the sustainability in the long

run, we have focused on the potentiality of the business of Biman. We have tried our

level best to address the problems of the company with some realistic solutions which

have drawn from our observations during our diagnosis of the company. Thus, we have

made a valiant attempt in making suggestions regarding Biman Bangladesh Airline

Limited to meet up the challenge of 21st century and to survive in the great competitive

aviation world.

*Top Ten Officers of Biman Bangladesh Airlines Limited

Name Designation Salary(Taka)

1. Air Cdr. (Retd) Zakirul Islam MD & CEO 3,00,000

2. Mr. A.M. Mossadique Ahmed Director, Finance & Planning 1,20,000

3. Mr. Md. Aminul Haque Director, Administration 1,20,000

4. Mr. Nafiz Ahmed Imtiazuddin Director, Customer Services 1,20,000

5. Wing Cdr. (Retd) M.M. Asaduzzaman

Director, Engineering & Stores 1,20,000

6. Capt. Sheikh Nasiruddin Ahmed

Director, Flight Operations 1,20,000

7. Mr. Syed Khaja Jonaid Director, Marketing & Sales (Acting)

80,000

8. Mr. Firoz Khan General Manager, BFCC 80,000

9. Mr. Rajpati Sarkar General Manager, Stores & Purchase

80,000

10. Mr. Md. Shah Newaz General Manager, Marketing & Sales

80,000

* Source- Rajpati Sarkar GM, Stores & Purchase,

Biman Bangladesh Airlines Limited

Situational Analysis:

Situational analysis means analyzing a company’s situation. More extensively, how

the company is influenced by the environment around it. There can be internal and

external environment which can effect a company’s situation. Biman Bangladesh Airlines

Limited also deals with both the external and internal environment in order to fulfill the

managerial functions of planning, organizing, leading and controlling. The whole process

is analyzed here to get a better understanding of the company.

External Factors: The external factors include all the forces acting on the organization from the outside.

The company literally has no control over these factors. On contrary, these factors

influence the company’s decision making process. There are direct and indirect forces in

external factors. Direct forces are customers, suppliers, competitors, and human resources

which influence directly the company’s management system. Indirect forces are

technological, economic, political, legal, regulatory, cultural, social, and international

forces.

1. Customers:

The most important external factor is customer because business is aimed towards

satisfying customers. Customers purchase an organization’s products or services. Their

decision to buy or not to buy a firm’s output directly determines the company’s sales

revenue and ultimately its survival. Biman Bangladesh Airlines Limited gives utmost

importance to its customers. The company was not established in a mission of being a

very profitable business entity but its primary aim was to serve the people. Though there

are many complains about Biman’s service towards it’s customers, Biman tries it’s level

best to satisfy it’s customers. The company management has employed necessary people

to look after the well being of the customers. But where the company lacks is the absence

of having customer research. Necessary customer research is not done to evaluate the

customers’ needs and wants. So this area has to be looked after. But Biman do have

research team to look for potential customers. They study different stations to know

whether running flights in those stations will be profitable or not. Thus Biman determines

the possibility of running flights in different stations.

There are two types of customers a business company can have. They are individual

customers and business buyers. Individual buyers are those who buy product or service

for personal consumption. Business buyers, on the other hand, buy not for personal

consumption. They buy for reselling them or producing something else.

In context of Biman, there are no noticeable business buyers available because of its

type of service. But there are a large number of individual customers for Biman. Mainly

these customers are Bangladeshi citizens who travel abroad and within the country. A big

number of foreign people also prefer Biman because of its cheap rate. Hajj pilgrims of

Bangladesh also hold a big percentage in the customers of Biman. But Biman runs non-

profitable flights for hajj pilgrims of Bangladesh as it has a duty to serve the pious people

of Bangladesh. Thus Biman serves its customers.

2. Competitors:

Another important issue for a business company is competitors. Competitors are

company’s opponents, the companies against which the organization competes for

customers and needed resources. There are two types of competitors available in

business. They are intratype competitors and intertype competitors.

Intratype competitors are companies that produce the same or similar

products/services as the organization. In context of Biman Bangladesh Airlines Limited,

there are many intratype competitors who are stronger than Biman in terms of financial

capability and technology. There are domestic competitors like GMG, United Airlines,

and Best Airlines. They not only compete in domestic level but also have international

flights. But Biman Bangladesh Airlines Limited has a competitive advantage over these

companies. The company is more experienced than these relatively new companies and

has more assets to work on. But there are international competitors who are more capable

are the greatest threats of Biman. They technologically and financially well off which

makes Biman to spend serious time analyzing their strategies. There are international

companies such as Emirates, Saudi Arabian Airlines, Thai Airways, Singapore Airlines,

Malaysian Airlines, Jet Airways, Kingfisher, Ettihad, Gulf Airways, Kuwait Airways,

and Dragon Airlines etc which are competing strongly with Biman Bangladesh Airlines.

Planning department of the company performs effective analysis of these competitors. It

reviews and evaluates information from many sources to have a solid understanding of

the competitors. But what Biman Bangladesh Airlines needs to do in this regard is to

establish a competitor intelligence team. Competitor intelligence team is staffed by two to

five employees assigned to obtain specific information about competitors.

Overall, Biman needs to establish and protect competitive advantages, particularly

strengths that bolster company’s competitive power.

3. Suppliers:

Suppliers are those who provide required resources-funds, energy, equipment,

services and materials to the company to produce a product or service that succeeds in the

market place. General Sales Agency (GSA) is the main supplier of passengers for Biman

Bangladesh Airlines Limited. GSA is the agency where passengers normally book

tickets. GSA sends these passengers to Biman. Biman maintains a good business relation

with GSA because they are the main suppliers of customers. Biman do have a backward

vertical linkage system which enables the company to sell the tickets itself. But it has a

higher price tag due to the inclusion of commission that the company gives to GSA.

Another type of suppliers for Biman Bangladesh Airlines Limited is the manufacturer

companies which provide aircrafts to the company such as Boeing, Airbus, Fokker, ATR

etc. This supply is very time consuming and costly. Biman can’t have backward vertical

linkage system in this regard due to the high cost structure.

Another type of suppliers is spare parts manufacturer companies such as Honeywell,

M/S Meggitt, Lufthansa etc who provide the spare parts of aircrafts to the company.

There are also engine suppliers such as Rolls Royals, General Electric Company, TLD

etc who provides engines. Biman needs to maintain a good relation with these companies

to avoid any kind of troubles while giving services.

Biman has already done a backward vertical linkage in one sector which is food

service. Biman has his own food catering service which is called Biman Flight Catering

Centre (BFCC). It doesn’t only supply food to Biman but also to other Airlines as well.

4. Human Resource:

Human resources are the vast resource of people in the external environment from

which an organization obtains its employees. Biman Bangladesh Airlines Limited recruits

its employees through a very competitive test. These people are the most precious

internal resource of the organization because they provide the knowledge, skills and drive

that create, maintain and advance organizations. That’s why, Biman always emphasizes

on recruiting the best people as their employees. In spite of this system, there is a great

flaw, as the head or Managing Director is appointed by the Government which sometimes

leads to the intrusion of incompetent people at the top level.

There are four issues regarding Human Resource Management. They are culturally

diverse workforce, women in the workforce, the downsizing trend and the aging

population. Biman doesn’t have a culturally diverse workforce as most of the recruitment

has been done from Bangladesh. Bangladesh is not a culturally diversified country.

Biman have a large number of women working for them which is very good for the

company performance and image. Biman doesn’t have a downsizing trend as it seldom

downsizes employees. But it needs to be done here because of excessive workforce in the

company. The company doesn’t have an ageing population because there is a retirement

obligation for people who are over 57 years of age. Thus Biman have a nice workforce to

work with.

5. Technological:

Technological forces are developments in technology in the external environment that

can have an impact on an organization in two ways. Technological developments can

influence an organization’s use of knowledge and techniques in producing a product or

service and in performing other work (e.g., financial analysis, clerical tasks) of the

organization. In context of Biman Bangladesh Airlines Limited, technology has a great

importance as it is a technology based service. Availability of new advanced

technological aircrafts enables Biman to go for modern aircrafts for better service. But

usually they are very costly and due to scarcity of funds, often Biman can not afford

those aircrafts. But now, the company is taking necessary steps to obtain those aircrafts.

Introduction of computer and internet has also influenced the company’s service. The

management already use internet as means of communication and the company is

planning to go for a highly advanced IT development.

6. Economic:

Economic forces are changes in the state of Bangladesh’s economy reflects by such

indicators as inflation rates, gross domestic product, unemployment rates, the size of

Bangladesh’s budgets and trade deficits. As Biman is a Bangladeshi company and

Bangladesh is a third world country with a not so wealthy economy, the company does

not have much to invest. The service is very much costly and poor people of our country

can not afford such expensive service. So it’s a negative factor for the company which

shrinks its profits.

7. Political, Legal and Regulatory:

Numerous laws and a multitude of authorities characterize the political, legal and

regulatory forces in the external environment that have an indirect but strong influence on

the organization. Bangladesh government has determined a pay scale depending on which

Biman’s wage of the employees’ is given. There are several tax laws which the company

has to oblige by for the legality of the company. Biman Bangladesh Airlines Limited has

to pay a certain percentage of its income as tax to government every year.

8. Cultural and Social:

Cultural and social forces are changes in our social and cultural system that can affect

an organization’s actions and the demand for its products or services. Bangladesh has a

social and cultural system comprising certain beliefs and values which influences

Biman’s service. The service of Biman Bangladesh Airlines Limited promotes religious

peace and equality which promotes the country’s culture.

9. International:

International forces apply when an organization relies on foreign suppliers for

resources or competes with international companies within the country. Biman

Bangladesh Airlines Limited is an international company which has to compete with the

international competitors within Bangladesh. As the company has weakening

opportunities as home, it tries to attract foreign customers in international markets. Also

most of the suppliers of the company are international companies which influence the

management of Biman to a great extent.

Internal Factors:

The Internal Environment includes all day to day forces within the organization in

which managers perform their actions. Various levels of management, managerial skills

and roles are the key forces in the internal environment.

1. Three Management Levels:

Most organizations function on at least three distinct but overlapping levels, each

requiring a different managerial focus and emphasis. They include the operations level,

the technical level and the strategic level. Managers at each of these levels must plan,

organize, lead and control.

Operations Level:

Like every other organization, Biman Bangladesh Airlines Limited has its operational

Function. The operational level of the company focuses on effectively performing the

service of the company. Managers and Assistant Managers of the each department of

Biman are working as operational managers. They monitor whether the activities of the

operating employees are done smoothly and correctly. They also implement the decisions

of the higher level and ensure the best allocation of resources that produces desired

output.

Technical Level:

As an organization increases in size, someone must co-ordinate activities at the

Operational level as well as decide which products or services to produce. These

problems are the focus of the technical level. In the context of Biman Bangladesh

Airlines, General Managers and Deputy General Managers of the respective departments

are the technical level managers. They are also called as mid-level managers. Their job is

twofold. First of all, they manage the operating level managers and works as a liaison

between strategic level and operating level managers. They interpret the plans of higher

level, find out a way to execute them and give necessary instructions to operating level to

carry out the plan.

Strategic Level:

Every organization works in a broad social environment. The strategic level managers

are top level managers who make sure that the technical level works within the bounds of

the society. Since the ultimate source of authority in any organization comes from

society, the organization must provide goods and services to society in a socially

acceptable manner. In the context of Biman Bangladesh Airlines Limited, Managing

Director and the respective department Directors are the strategic level managers who are

at the top of the organization. They determine the long term objectives and direction for

the organization. They make long term plans, deal with the external forces and determine

how to behave and interact as a company. Lobbying effort at influential level, advertising

effort and upholding the image of the company are also done by these top level managers

of Biman.

2. Skills of Managers:

Certain general skills are needed for effective managerial performance, regardless of

the level of the manager in the hierarchy of the organization. The basic skills needed by

all managers are human, technical and conceptual.

Human Skill:

The importance of human skill is needed most in those managerial jobs that involve

extensive interactions with other employees. Strategic, Technical, Operational, all levels

need this human skill. Every manager needs to work with people to understand them.

They also need to motivate them. The management of Biman Bangladesh Airlines

Limited is adept in human skill as they frequently need to interact with their employees.

Technical Skill:

Technical skill is a skill that is particularly focused in a particular field. Mid level

managers, engineers in Biman Bangladesh Airlines need this skill to use specific

knowledge, techniques and resource in performing work. General Managers of respective

departments and the engineers need to develop strategies to implement plans or solving

problems which is done by this skill.

Conceptual Skill:

Conceptual skill is the ability to see the bigger picture. Managing Director and the

Directors of the respective departments are the holder of these skills. They have the

ability to diagnose the complex problem. They need to foresee what is going to happen in

the future and work according to that prediction. They are very shrewd and the

conceptual skill enables them to have more power in the company. Their job is very

reputable but risky because if their conceptual skill does not work properly, they may

lose their job.

3. Roles of Managers:

Managers need to play certain roles in order to perform managerial activities

correctly. These roles can be categorized under three different grouping. They are

Interpersonal roles, Informational roles and Decisional roles.

Interpersonal:

These roles focus on person to person relationships. There are three roles under this

category. They are Figurehead role, Leadership role and Liaison Role.

Ø Figurehead role:

It is a largely ceremonial or symbolic role. Managing Director of Biman normally

plays this role as a respectable person in some ceremonies.

Ø Leadership role:

A manager’s leadership role involves directing and coordinating the activities.

Managers of all level in Biman play this role while performing typical managerial work

such as hiring, training, promoting, dismissing and motivating subordinates.

Ø Liaison role:

It means when a manager maintains a connection between their organizations with

other external area of command. This may involve contacts both within and outside the

organization. Within the Biman’s organizational structure, all managers need to play this

role to maintain good relations with other managers and employees. Usually, contacting

with important people outside the organization is done by MD or Directors of Biman.

Informational role:

This set of roles establishes the manager as the central force for receiving and sending

non routine information. There are three types of roles under this category. They are

Monitorial, Disseminator and Spokesperson.

Ø Monitorial:

The monitorial role involves examining the environment to gather information about

changes, opportunities and problems that may affect the unit. Normally managers of all

departments of Biman play this role to ensure everything is working well within the

company.

Ø Disseminator:

It means providing important or privileged information to sub-ordinates that they

might not ordinarily know about or able to obtain. Especially higher level managers of

Biman play this role to keep their subordinates informed.

Ø Spokesperson:

It is a role that managers play when they represent their organization to the insiders or

outsiders of the firm. Usually GM of respective departments of Biman internally and MD

& Director acts as a spokesperson.

Decisional role:

It is a decision that managers have to play when they have to give decisions. Four

roles that falls under this are Entrepreneur, Disturbance Handler, Resource Allocator and

Negotiator.

Ø Entrepreneur:

When the manager initiates something new, they play this role by bringing constant

creative ideas. They are the usual risk takers. MD of Biman tries to bring effective

changes in his plan to improve the service of Biman.

Ø Disturbance Handler:

When a manager makes immediate decisions to take corrective actions in response to

a problem, he plays this role. The immediate goal is to bring stability. Managers of

respective departments in Biman play this role when a strike or a problem in rendering

service takes place.

Ø Resource Allocator:

Managers have to play this role to distribute resources that are limited within the

organization. In Biman, first line managers to Directors, all play this role to maintain

equality and stability of the organization.

Ø Negotiator:

Managers play this role when they bargain for resources. It normally happens in

Biman between department to department managers to get sufficient resources.

SWOT Analysis

* Strength

Skilled work force :

In 1972 Biman Bangladesh Airlines was formed on with 2500 skilled and unskilled

work force. Now a day Biman Bangladesh Airlines has a skilled workforce. This work

force is the result two factors. First, one is the well-designed & well coordinate employee

recruitment process and the second one is the on going training process. Along with

written & viva interview both mental and physical test is mandatory before the final

recruitment. On going training is available for both new & old employees to increase

their skill & experience level. Therefore, the cockpit cruse, managers, engineer’s

accountants & workers from other departments are skilled in their own departmental

works.

Good infrastructure :

Biman Bangladesh Airlines has a very well established infrastructure in both

domestic & international field. It has 15 offices in home and more than 37 stations in

abroad. In addition to that, Biman has 202 approved local travel agents - 140 in Dhaka,

32 in Chittagong and 30 in Sylhet. Biman also has 120 travel agents in nine foreign

stations-Thailand, UK and Ireland, USA, Singapore, Nepal, Germany, Japan/Korea,

Canada, and France along with 19 General Sales Agents (GSA) all over the world. On the

other hand, they have sufficient accommodation facility to run their official work.

Moreover, they are able to provide proper working environment to their employees.

Maintenance capability :

Most of the airbus of Bangladesh Biman specially DC-10, Boeing 737, F-28 are

maintained internally. If they face any technical problem, immediately they call upon

their own engineers. The internal people of Bangladesh Biman also do the maintenance

of the airbus. All this factors directly cut the extra cost hiring or paying to the outsiders.

Therefore, in domestic market we can add these factors as distinctive competence of

Bangladesh Biman because no other private domestic airlines have this.

Training Facilities :

Biman Bangladesh Airlines has established BATC (Biman Airlines Training Centre)

to train their workforce. This training centre provides training to all the employees

according to their department & job position. Cabin crew, cockpit crew, internal

engineers, finance personal are all trained here. Now days apart from the internal work

force, people from outside or from other airlines are also trained here. This gives Biman

Bangladesh Airlines the opportunity to earn an extra profit. Bangladesh Biman mainly try

to appoint their retired experienced officers as trainers.

Number of fleet :

Biman Bangladesh Airlines has sufficient number of fleet in the domestic market. So

the number of domestic fleet is higher. The number of fleet in international market is not

that much higher but still it is able to manage the required demand. In addition to that,

new fleets are also coming to enrich the field of international service.

Monopoly in ground handling:

Ground handling in Bangladesh is only done by Bangladesh Biman. Bangladesh

Biman also runs the GSE (general service equipment) department. Moreover, airport

service, boarder & passenger service, checking is all done by Bangladesh Biman both for

their own and other airlines. About 9% of its revenue comes from there from sources.

No other airlines have such opportunity. Therefore, Bangladesh Biman earns a huge

amount of monopoly revenue by having the right to do all these extra activities.

* Weakness:

Old Aircrafts :

A larger number of aircrafts in Bangladesh Biman is old enough to replace. Now-a-days

two of them are become mandatory to replace. They are F-28(bought in 1982) and DC-

10(bought in1978-1979). The operating cost of DC-10 is, according to an estimate, US$

10000 more per block hour than the new generation aircraft. It is calculated that if the

new generation aircrafts are utilized 10 hours each per day, each aircraft will save

US$ 3,00 00 per month. These aircrafts are not completely safe to give passenger service.

Sometimes there are delays in flight due to technical problem in this old aircrafts.

According to the survey results, about 75% of the respondents had experienced flight

delay during their last travel by Biman. This gives an indication of the large amount of

funds that have to be spent by the airliner on a regular basis to compensate waiting

passengers. As a result, the image of Biman Bangladesh is going down day by day. This

also creates customer dissatisfaction and consequently there is a customer-switching

going on towards the other airlines for better service. If Bangladesh Biman does not take

any immediate action to stop the customer switching, this will badly damage them in long

run profit.

Unionism:

Unionism is a severe problem, which is affecting Bangladesh Biman for years. The

labor union of Bangladesh Biman is highly involved in politics for years. They follow

certain political parties according to their personal choice. As a result, they create severe

problem by regarding their own political interest beyond the company’s interest.

Consequently, this seriously harms the company itself.

Political Influence :

Because of being a state-owned corporation, Biman has suffered from being

politicized in many aspects. It has been politicized in various manners such as operating

domestic flights with wide-bodied aircraft, continuing flights in loss-making routes. In

addition to that, there is a tremendous political intervention in recruitment and

promotions.

Corruption:

Constant corruption in different sectors of Biman is another significant barrier that is

making it difficult for the organization to break away from loss making ways. Incidents

of corruption are evident in purchase and leasing of aircraft, store and purchase of spare

parts, in the tender process and in ticketing and reconfirmation.

Mismanagement of customer service :

The customer service of Bangladesh Biman is not up to the mark. After assessing the

service level of Biman in terms of the satisfaction of the passengers, majority of the

respondents (72%) termed the service quality of Biman is poor. The food that is serving

to the customer during the journey is also below the mark. In addition to that, sometimes

food is not allocated properly to the customers because of mismanagement.

Shortage of fund:

Bangladesh Biman was established at 1972. Therefore, it is an old reputed company.

At this point Bangladesh Biman needs $1.5 billion for the modernization of the company,

which mainly includes replacing the old aircrafts, Government has 100% share of

Bangladesh Biman but they do not invest much on the business. In addition to that, they

are also unwilling to issue the share to the public. On the other hand, Bangladesh Biman

needs to take loan from the banks. However, government does not given sovereign

guarantee to take loan. As a result security of loan is not given. Therefore, the funds are

limited. Finally due to this fund problem, Bangladesh Biman is failed to achieve their

predetermined goals and unable to maintain their required standard.

Conflicts of interest:

There are number of departments in Bangladesh Biman such as administration,

finance, flight operations, store and purchase, customer service, engineering, planning,

and special project. Sometimes officers from different departments try to maintain their

own departmental interest without considering the interest of the company as a whole. On

the other hand because of biased interaction among the high authority and the

departmental officers, some department always get the privilege of enjoying extra benefit

such as higher salary, accommodation facility, transportation facility etc. As a result,

extreme dissatisfaction arises among the department. In addition to all that, true merit

does not get proper evaluation.

Unutilization:

Biman Bangladesh airlines always has to give priority to government interest over

commercial one unlike a purely commercial airlines. The government using Biman to

render service to the nation such as, operating government VVIP flights, relief flights and

hajj flight, and carrying perishable items at cheaper rates. Therefore, Biman cannot run

itself like full commercial airlines instead of having the capacity to do so.

Lack of accountability:

The Board is not accountable to a higher authority because the Minister of Aviation,

who is the designated chief of the organization, is the Chairman of the Board himself.

Therefore, the Board is neither directly accountable to any other body, nor is it under

obligation to report to any other authority for its activities and performance. This existing

hierarchy creates problem in delegating the duties for the Managing Director, CEO of

Biman.

* Threats

Non co-operation by Government :

Government is not supporting Bangladesh Biman properly. They are giving more

than usual traffic right to other foreign and domestic airlines. As a result, Biman is losing

their customers day bay day. GMG airlines, JET airlines, Kingfisher airlines are

becoming so strong day by day, which is creating tremendous pressure on Bangladesh

Biman. Government can help them to get rid of this situation but they are not that much

willing to do so.

Possibility of outsourcing :

We know that ground handling in Bangladesh is only done by Bangladesh Biman and it

earns a huge amount of monopoly revenue by having the right to do so. Now a days other

companies are trying to get the ground handling right from Government. If this really

happens, we can assume the demolishing consequence of Bangladesh Biman. A large

chunk of revenue will be lost from Bangladesh Biman, which will lay the pillar of other

problem.

Foreign competitors :

There are advanced foreign competitors, like Emirates, Qatar, Singapore, Thai,

kingfisher, Air India, Gulf, Bahrain Airlines. They are posing strong threats to Biman

Bangladesh Airlines. They are one-step ahead from Bangladesh Biman only because of

their good marketing and service design skill. They are rendering lower fair by cutting

cost from other services. They may cut the fair cost by not providing food. Sometimes

they also give occasional discount offer on ticket to their customers. So regarding all this

aspects Biman Bangladesh Airlines is under a big threat from these foreign airlines.

Because Among the total share of revenue earned from passengers, 91% is earned

from international routes.

Domestic competitors :

Till now, the position of Biman Bangladesh Airlines is very strong in domestic

market. However, there are a number of domestic airlines like GMG, United, Bismillah,

which are doing very well to give tough competition to Biman. Because of these airlines,

Biman Bangladesh Airlines is loosing their market share rapidly.

Unstable political situation :

Unstable political situation is a threat to our Airlines Business. As the political

situation of Bangladesh is very unstable, new government comes and changes the system

of Biman after every 5 years which is highly detrimental for the company.

Unjustified interference :

There is unjustified interference from influential quarters. Suppose while buying an

aircraft, certain company is suggested which harms Biman Bangladesh Airlines. In

addition to that, Employee selection in top level is sometimes influenced by influential

quarter of Government that bring non-deserving, inexperienced, and unskilled top level

managers in the company.

* Opportunity

Ethnic Market :

Many non residential Bangladeshis are currently stayed in abroad. They really want to

feel the gesture of Bangladeshi food commodities. Again they feel comfortable with

Bangladeshi, food culture which can be served by Bangladesh Biman. As a Government

controlled organization Biman Bangladesh Airlines has a distinctive competence to do so.

So there is a large market available there. Biman Bangladesh Airlines just need to capture

the market. In addition to that Government patronization is also required to do so.

Developing BATC:

All most every standard airline in abroad have very good training centers which give

international training to employees of foreign countries. If Biman Bangladesh Airlines

can develop BATC (Biman Airlines Training Center), just like IATA (International

Aviation Travel Association), ICAC (International Civil Aviation Organization), Then

Biman can give foreign employees the services. On the other hand this can be a very

good source to earn revenue.

Maintenance opportunity:

Right now Most of the airbus of Bangladesh Biman specially DC-10, Boeing 737, F-

28 are maintained internally. So infrastructure is there. Now if Biman Bangladesh

Airlines can develop their maintenance facilities for more advanced aircrafts, then they

can do A-check, B-check, C-check. In addition to that they can do heavy maintenance

check for aircrafts of foreign airlines also. This is a great opportunity to earn foreign

revenue. So the proper use of infrastructure should bu maximize.

Food Service:

If BFCC is developed to a certain level, it can render their service to other airlines.

Particularly if BFCC can make food of foreign countries for foreign airlines, it will be a

great opportunity to earn revenue.

IT:

Along with MIS department if Biman can introduce its IT department, then they can

develop there own software rather than purchasing from others. Software for other

advanced airlines can also be developed here. If so then other companies will buy or use

those software or programs. If Biman Bangladesh Airlines can capture this opportunity

well, it will generate high revenue.

Objectives:

Objectives mean what will be done in near future. Some important characteristics which

are very closely related with objective are

1. Very defined statement.

2. What to be done.

3. When to be done.

4. How much to be done.

Biman Bangladesh Airlines Limited also has some objectives which they want to achieve

in future.

Broad Objective:

“It shall be the function of the company to provide and develop safe, efficient, adequate,

economical and properly coordinated Air Transport Services, internal as well as

International and the company. shall so exercise its power as to secure that the air

transport services are developed to the greatest possible advantage in the interest of the

country.”

The service of Biman Bangladesh Airlines Limited at present is far away from their

organizational goal. To reach that height, the company has taken some short term goals

through which they can improve their performance and can reach their destined place in

near future.

5 Year Term Objectives:

1. Achieving 90% cabin factor and 95% load factor:

Cabin factor means percentage of seats occupied by passengers and load factor means

percentage of combined passengers and cargo carried by Biman. Biman Bangladesh

Airlines carries both passenger and cargo to their destination. Right now, only 60-70% is

achieved in case of both factors which is not satisfactory for the company. Within 5

years, the company targets these ratios to increase up to 90-95% which will be financially

well for the company.

Ø Strategy:

To achieve this target, Biman wants to increase their level of service to satisfy customer’s

demands. To do this, elements of customer dissatisfaction such as delay in flight

schedule, age-old aircrafts and other problems are planned to be eliminated. Alongside

this, a great marketing strategy has been taken in this regard. Marketing and sales people

have to take a big initiative to attract customers towards Biman. They will let people

know about the advantages of traveling in Biman in a more intensive way. Special

incentives will be offered including rebet for group traveling, mileage point etc. for

attracting more people. A market survey will be done every year to know what customers

expect from Biman. Actions taken accordingly will also encourage people to travel in

Biman. Marketing conference will be increased from one to two every year to reach more

frequently to people. Thus concern among people about the service of Biman will be

created which will enable more people to travel and more cargo to be sent by Biman.

2. Expansion of Market up to 40 Stations:

Biman used to run flights in 29 destinations before economic recession hit the world

economy. As a result of that economic melt down, the company had to reduce it’s

operations. Now Biman is operating in 18 destinations including Kuala Lumpur,

Bangkok, Singapore, Hong Kong, Katmandu, Kolkata, Delhi, Karachi, Dubai, Abu

Dhabi, Muscat, Riyadh, Jeddah, Kuwait, London, Rome, Doha, Bahrain etc. Now Biman

targets to retain its old destinations including New York, Brussels, Narita (Japan), Paris,

Frankfurt, Athens, Baghdad, Nagoa, Tripoli, Mumbai, Dhahran. Now Biman also wants

to try the hugely untapped market in the outer world. Biman targets to increase it’s

stations to 40 within 5 years time. Some target destinations are Tehran, Istanbul, Gonzo

(China), Male, Colombo, Toronto, Sydney, Manchester, Jakarta, Kunming, Seoul etc.

Ø Strategy:

To achieve this feat, Biman plans to do a market research first to measure the

profitability of these untapped markets. After that the company will take permissions

from respective governments to run flights in those stations. Meanwhile Biman needs to

increase its number of aircrafts to run so many operations successfully.

3. Adding 15 Aircrafts in the Fleet:

Right now, Biman is running all its operations with 12 aircrafts. These fleets include

2 F-28, 4 DC-10, 3 Airbus, 2 Boeing 737 and 1 Boeing 777. This is a very small number

of fleet for an international airlines company. Besides, increase in planned destinations

and age-old aircrafts have also made it mandatory for the company to bring new aircrafts.

Biman Bangladesh Airlines has already planned to bring 15 new aircrafts within the next

5 years.

Ø Strategy:

Among those 15 aircrafts, 3 will be taken as a lease in the next 2-3 months. Another 12

new aircrafts are destined to join Biman’s fleet in the coming years. Biman Bangladesh

Airlines have reached in a historical agreement with Boeing Company which will provide

12 new aircrafts to Biman phase wise over the next 5 years. Biman has given the advance

payment by their own money while the company has also come to an agreement with

EXIM bank of America for funding the loans for those new aircrafts.

4. Transforming Traditional Management System into Electronic Management

System:

Traditional methods of storing records require a great deal of effort to manage,

distribute, and retrieve.  Electronic Records Management has revolutionized the archival

of information and provides the solution to these problems, making all documents

instantly available within the organization and to the public if desired. So Biman

Bangladesh Airlines has planned to transform from their document based management

system to electronic based management system within next 5 years time to make their

management more efficient, quick and transparent.

Ø Strategy:

To achieve this goal, Biman Bangladesh Airlines Limited has already engaged SITA

Professional Services to help its IT and Communications strategy. SITA will render help

to develop IP VPN system for the company. Internet protocol virtual private network (IP

VPN) is a scalable managed service that is a world-leading flexible and modular intranet

service that facilitates open communication within a community. Through IP VPN,

Biman will be able to communicate with all their employees all over the world at a

lightening fast speed, to store data and make them available to necessary people. SITA

has agreed to develop the whole system within 5 years after which Biman will be fully

digitalized. Besides, Biman has planned to develop online ticket reservation system. For

this, they have already appointed efficient software managers to develop this system with

the help of Visual Basic.

5. Rebuild The Image:

For the last few years, Biman has lost it’s image as a reliable airlines due to many

reasons. So the management has planned to rebuild it’s image for principal traveler

markets - including tourists, Bangladeshi nationals working abroad and Hajj pilgrims

over the next 5 years.

Ø Strtegy:

To achieve that feat, Biman has planned to upgrade it’s service level. Scheduled flight

operation is planned to be operated. Transparency in all sectors will be ensured. To

ensure best possible customer satisfaction, Biman has planned to open a new Customer

Care department. It will solve all customer related problems and make people think that

Biman is a customer friendly airline. Apart from that, Biman Bangladesh Airlines

Limited is planning to participate in corporate social responsibility programs. Besides,

the company will make 15% quota for minorities and 5% quota for ethnic groups at the

employee level which will upgrade the image of the company. Thus the company is

planning to become a reputable airline in the next few years.

Management Issue

Organization function :

Organizing function is very important for a company’s perspective. Because the

main motive of organization function is to achieve coordinated effort through relationship

of authority and the design of a structure of task. Again the relationship between

organization structure and performance, attitude, satisfaction is very important. There are

three dimensions to analyze differences between organization structures. They are

centralized, decentralized and bureaucratic.

Biman Bangladesh Airlines is a centralized Company, Centralization refers to the

location of decision-making authority in the hierarchy of organization. In addition to that,

the concept refers to the delegation of authority among the job in the organization.

According to Biman’s organogram, the Managing Director (MD) is the Chief Executive

Officer (CEO) of Biman. There are eight divisions in Biman – administration, finance,

flight operations, engineering, store and purchase, customer service, planning, and

marketing & sales – each headed by an appointed director of its own. Biman’s

management and most of the financial matters fall under the responsibility of this eight-

member Executive Board supported by the managing director. All the key decision and

planning are taken by the managing director and directors of the respective

department’s .Therefore the managers of technical and operational level carry out those

decisions.

Bases of departmentalization:

The crucial managerial consideration when creating departments, is the

determination of the basis for grouping jobs. Usually numerous bases are used throughout

the organization, but the basis used at the highest level determines critical dimensions of

the organization. There are five widely used departmentalization bases- functional,

process, product, customer and geographic.

The departmentalization of Biman is based on functions. Function base

departmentalization means departmentalization based on internal activities or functions

of the company. Biman combines their jobs according to the functions of the

organization. There are eight departments in Biman- administration, finance, flight

operations, engineering, store and purchase, customer service, planning, and marketing &

sales. From the name of the departments, we can understand that all the department is

named on their internal activities. The main advantage of functional basis

departmentalization is efficiency. Therefore, to make the internal activities efficient,

Biman has followed the functional bases of departmentalization.

Leadership style:

Leadership is the human factor, which binds a group together and motivates it

towards a common goal. Management activities such as planning, organizing, decision

making are incomplete until the leader triggers the power of motivation in people and

guides them towards the goal. From organizational view, leadership means imposing

power or influencing the subordinates to achieve a common goal. Of course, in every

large organization, there is a power structure and every leader has some higher authority.

There are five different bases for such power- coercive power, reward power, legitimate

power, expert power, referent power.

Often legitimate power is observed in Biman’s internal management or leadership

style. Legitimate power comes from the position of a superior in the organizational

hierarchy. For example, the CEO of Biman possesses more legitimate power than the

departmental directors do and department manager has more legitimate power than the

first line officers do. Although legitimate power increases with added responsibilities, but

Biman’s authority can decrease that power if someone fails to meet his/her assigned

responsibility.

Recommendations

To help Biman move out from its old-fashioned way of management, to accommodate

the future opportunities and to avert the current crisis and threats, it is extremely essential

for Biman to undertake the following steps set forth as recommendations.

Policy Level

1. The dilemmas in the governance system of Biman need to be settled down through

bringing in necessary changes in the Ordinance.

2. Experts on commercial airline and aviation industry must be included as members in

the Board of Directors.

3. Biman should abide by the current business methodologies as used in world-class

airlines to make it successful and profitable.

4. The Annual Report should be made public. This report must include financial

statements.

5. Biman should not be exploited in the name of national interest. It should not operate

unprofitable flights.

6. Biman’s existing procurement rules should be appropriately amended so that Biman

can take its own business decisions.

7. Biman should operate by Biman people without any interference from the Ministry.

Operational Level

Administrative

1. Consultants should be hired with regard to finance, store and purchase.

Planning

1. Biman should make a phased fleet renewal plan.

2. Biman should develop and adopt a coping strategy addressing the market need.

Leasing will reduce immediate capital requirements and will allow Biman to have

flexibility in capacity which means that the airlines can scale-up or scale-down available

seat capacity according to the market trend.

3. Biman should consider closing down the loss-making routes and divert the flights

entirely to the profit-making ones.

4. Biman must discontinue operation of short sector flights by wide-bodied aircrafts.

Human Resources

1. Biman should recruit staff with required qualification directly at officer level.

2. Analyzing current staff size and performing cost effective analysis, Biman should cut

down its staff.

3. Recruitment, transfer, and promotion on political consideration must be stopped.

Corruption

1. Leasing and purchase process of aircraft should be made transparent.

2. During procurement of spare parts, technical experts must be included in the process.

Punitive actions against corrupt staff of the in and out station of Biman must be taken.

Modernization of Biman

1. Modern cost effective inventory control system should be introduced.

2. Biman needs to keep its website continuously updated so that the clients can get the

latest and complete information from the website.

3. Biman must go all out to introduce e-ticketing, e-reservation, and e-procurement of

spare parts.

Flight Schedule Delay

1. Delay analysis should be undertaken as a routine process and necessary steps should be

taken to maintain the schedule in a tolerable delay range.

In-Flight Services

1. In-flight service must be improved. Steps may be undertaken to ensure full

complement of cabin crew, professionalism among the cabin crew, and provision of

proper flight crew training to ensure that quality service can be rendered by the cabin

crew at all times.

Conclusion

Biman Bangladesh Airlines Limited is the business entity which runs the national flag

carrier in order to serve people and make profit. But Biman has not been able to live up to

the expectations of the people of our country. There are various reasons behind it

including corruption, system loss, incompetence and so on. But the real problem of

Biman lies elsewhere. Biman is obliged, by legislation, to prioritize national interest over

commercial ones, and not to be a pure commercial airliner. The government is exercising

the power as given by the ordinance in its activities. In this context, government is

utilizing Biman to render services for the nation, for example, operating government

VVIP flights, relief flights and hajj flights and carrying perishable items at a cheaper rate.

In practice, government is receiving these services from Biman, but, on the other hand,

creating an environment which dictates that Biman should run itself on its own finances

by making profits. This is a dilemma for Biman which is harming the company to a great

extent. While it is passing through the most difficult period in terms of financial crunch in

its history of 38 years, to judge Biman’s performance on profitability alone, without

giving any consideration to the wider service it has rendered for the national interest and

at the behest of its owner, would not only be biased and partial, but also a great travesty

of justice. So this dilemma of Biman to work either as a service or a commercial airliner

has to be resolved. Government should take necessary steps to turn Biman Bangladesh

Airlines Limited into an independent business entity, both structurally and financially.

Only then Biman Bangladesh Airlines will be able to fly into a sustainable future.