Airline Industry Recovery: Bangladesh Aviation Sector Growth and Regional Connectivity

The Numbers That Rewrote Aviation's Pandemic Narrative

When the global airline industry declared 2020 "the worst year in history for air travel demand" — a 60 percent collapse in passenger numbers and a 70 percent collapse in revenue — few analysts predicted how quickly or dramatically the recovery would unfold. By 2024, global passenger traffic reached approximately 9.5 billion passengers, surpassing pre-pandemic levels at 104 percent of 2019 figures. The International Air Transport Association forecast that 2025 would mark the first time annual global airline revenues broke the $1 trillion threshold, with passenger numbers projected to exceed five billion for the first time — a 6.7 percent year-on-year increase. Asia-Pacific led regional recovery with 16.9 percent revenue passenger kilometer growth in 2024, the strongest of any region globally. Between 2020 and 2022, the world's airlines accumulated nearly $182 billion in net losses. The 2023-24 period generated an estimated combined net profit of $67 billion. The recovery was real, uneven, and in some markets, faster than anyone projected.

Bangladesh was among the markets that surprised on the upside. In 2021, the International Air Transport Association predicted Bangladesh would return to pre-COVID passenger traffic levels by 2024. Bangladesh surpassed that projection ahead of schedule. The Civil Aviation Authority of Bangladesh recorded 17.4 million air passengers at the country's airports in 2023 — a 23.4 percent year-on-year increase — with international passenger counts alone surging 30 percent from 2022 and 37 percent above the pre-COVID 2019 baseline. By 2023, Dhaka's Hazrat Shahjalal International Airport was handling an average of 37,000 to 38,000 passengers daily. That number was climbing further as Terminal 3 began coming online.

Terminal 3 and the Infrastructure Bet on Regional Hub Status

The partial inauguration of Hazrat Shahjalal International Airport's Terminal 3 on October 7, 2023 — and its progressive operationalization through 2024 — represents the most consequential single investment in Bangladesh's aviation history. Built by the Aviation Dhaka Consortium comprising Mitsubishi Corporation, Fujita Corporation, and Samsung C&T, at a total project cost of Tk 21,300 crore ($2.3 billion), with 70 percent of financing provided by the Japan International Cooperation Agency, Terminal 3 adds 12 million passengers of annual capacity. When the terminal reaches full operations, HSIA's total annual capacity rises to approximately 20-24 million passengers, making it one of South Asia's larger airport facilities.

The terminal's physical specifications reflect ambitions that go beyond passenger throughput. Its 226,000 square meter passenger terminal includes 115 check-in counters, 26 boarding bridges, automated baggage handling systems, and six dedicated business lounges. Its cargo complex is designed to triple the airport's export cargo handling capacity — from 2 lakh tonnes annually to approximately 5.47 lakh tonnes — with three-category cold storage facilities to preserve temperature-sensitive agricultural and pharmaceutical exports. A VVIP complex with separate checkpoints and premium lounges signals the political seriousness with which the airport is being repositioned. The terminal is connected to the metro rail and the Dhaka Elevated Expressway, addressing the longstanding criticism that HSIA was poorly integrated with the capital's broader transport network.

Japan's Parliamentary Vice-Minister for Foreign Affairs, speaking at the inauguration, framed the project in terms of Bangladesh's geographic positioning: "Located at the nexus of Southeast Asia and the Indian subcontinent, Bangladesh is an important partner in realizing the Free and Open Indo-Pacific." The EU Ambassador to Bangladesh echoed the strategic dimension, noting the terminal would transform Bangladesh's passenger and cargo handling capabilities. The aspiration — shared by Bangladesh's government across both the Hasina administration that built Terminal 3 and the Yunus interim government that has inherited it — is to position Dhaka as a regional aviation hub along the routes connecting South Asia, Southeast Asia, the Middle East, and beyond: a role currently held by Dubai, Singapore, and increasingly Doha, but one that Bangladesh's geography makes at least theoretically plausible.

Biman's Record Year and the Fleet Constraint Problem

Against the backdrop of Terminal 3 and rising passenger volumes, Biman Bangladesh Airlines posted its best financial results in its 55-year history in fiscal year 2024-25: unaudited profit of Tk 937 crore, with revenue reaching Tk 11,631 crore — the second consecutive year above Tk 10,000 crore, a threshold crossed for the first time in FY 2023-24. The airline's cabin factor rose to 82 percent, an operationally efficient load that reflects the combination of growing demand and constrained supply. Cargo performance was notably strong: cargo sales in September and October 2024 grew 146 percent and 102 percent respectively compared to the same months in the prior year. In January 2025, Biman recorded its highest-ever monthly ticket sales. Over the five months from September 2024 to January 2025, total ticket sales grew 36 percent year-on-year to Tk 4,057 crore.

The commercial drivers behind Biman's turnaround are identifiable: the lifting of international selling restrictions, optimization of revenue management, completion of a Special Prorate Agreement with ITA Airways enabling access to Italian and European city markets via Rome, and a 27 percent jump in web sales driven by expanded credit card acceptance and reduced Global Distribution System costs. Interline agreements with Japan Airlines, Turkish Airlines, and Hainan Airlines were at various stages of negotiation as of early 2025. The airline's managing director described plans for a business-to-business travel agent portal and expanded credit card acceptance in Italy, Canada, the UK, and Japan — the diaspora remittance markets that have historically driven Biman's London and Manchester route revenues.

The structural constraint that capped this momentum was simple: aircraft. Biman's fleet of 21 aircraft — four Boeing 777-300ERs, four Boeing 787-8s, two Boeing 787-9 Dreamliners, six Boeing 737s, and five Dash 8-400s — was insufficient to capitalize on demand. Biman's managing director acknowledged directly that the airline could not expand route frequencies or add new profitable international destinations because of aircraft shortages. The airline has approved a plan to expand its fleet from 21 to 47 aircraft by 2034 — a 122 percent increase — through the acquisition of at least 26 new aircraft including Airbus A350s ordered during French President Macron's 2023 Dhaka visit. A long-term lease arrangement was also being pursued as a shorter-term bridge. Without fleet expansion, Terminal 3's capacity advantage risks being captured primarily by foreign carriers rather than Bangladesh's own airlines.

The 80 Percent Problem: Foreign Carrier Dominance and What It Costs Bangladesh

The most structurally significant fact about Bangladesh's aviation sector is one that rarely features prominently in the growth narrative: foreign carriers account for approximately 80 percent of passenger and cargo transport at Bangladeshi airports. Local airlines — Biman, US-Bangla, NovoAir, and others — together secure only 20-25 percent of the market. This ratio has economic consequences that compound over time. When a Bangladeshi migrant worker in Riyadh books a ticket home and flies Saudi Airlines, a significant portion of the revenue leaves Bangladesh's aviation ecosystem. When an RMG buyer flies into Dhaka on Emirates, the yield accrues to Dubai. Aviation is not merely a transport service — it is a value chain that generates employment, fiscal revenue, maintenance contracts, training ecosystems, and ancillary commerce. A market where 80 percent of activity flows to foreign carriers is a market where Bangladesh's aviation infrastructure investment substantially benefits foreign operators.

The dominance of foreign carriers also reflects structural dynamics that are not easily reversed. Bangladesh's aviation market is overwhelmingly driven by labor migration: the country recorded $30 billion in remittances in fiscal 2024-25, and migrant workers — traveling to Saudi Arabia, the UAE, Qatar, Kuwait, Malaysia, and other destinations — represent the majority of outbound passengers. These routes are dominated by Gulf carriers, Malaysian Airlines, and Singapore Airlines, which operate at scale and frequency that Biman and US-Bangla struggle to match with their current fleets. Meanwhile, inbound business travel and tourism, which in more developed aviation markets support premium yield routes, remain thin. US-Bangla Airlines, now Bangladesh's largest airline by fleet size at 23 aircraft after recent additions of an Airbus A330-300 and Boeing 737-800, has been expanding into Gulf routes specifically to compete in this segment.

The Regional Connectivity Calculation: Labour, Diaspora, and the Emerging Business Corridor

Bangladesh's post-pandemic aviation growth can be understood through three distinct passenger segments, each with its own economic logic. The first and largest is migrant labour: the record labour exports that drove remittances to $30 billion also drove passenger volumes, as the CEO of US-Bangla Airlines noted when explaining why Bangladesh surpassed IATA's recovery projections ahead of schedule. Wage earners resume travel faster than tourists and business travelers, and Bangladesh's labor export volumes — with a record 1.5 million workers going abroad in FY 2022-23 — created a demand floor that COVID disruptions had temporarily suppressed.

The second segment is educational migration and diaspora travel. Bangladesh has a substantial overseas community concentrated in the UK, Italy, Canada, and the US. Biman's direct Dhaka-London-Manchester, Dhaka-Toronto, and Dhaka-Tokyo routes serve diaspora markets whose travel frequency is driven by family events, religious holidays, and periodic home visits. The airline's interline and SPA agreements in progress with ITA Airways, Turkish Airlines, and JAL are oriented toward connecting these diaspora markets through partner hubs. The third segment — medical tourism, outbound leisure travel, and inbound business travel — is smaller but growing. Bangladeshi outbound medical tourism to India, Thailand, and Singapore has been rising, and government efforts to develop inbound investment and tourism create incremental demand on routes that are currently underserved.

Against these three demand segments, Bangladesh's hub ambition faces a competitive reality. Dubai, Doha, Singapore, and Kuala Lumpur have decades of investment and operational expertise as transit hubs. Dhaka's geographic positioning — between South Asia and Southeast Asia, on routes connecting the Bay of Bengal to East Asia — is genuinely strategic, as Japan's framing at the Terminal 3 inauguration acknowledged. But geographic advantage converts into hub status only when combined with slot availability, competitive connecting times, sufficient gate capacity, baggage handling reliability, and immigration facilitation — all areas where HSIA is still building. The IATA forecast that global passenger traffic will reach 12 billion by 2030 and 19.5 billion by 2042, driven disproportionately by emerging market growth in Asia-Pacific, creates a long-run demand environment that structurally favors Bangladesh's ambitions. Whether Bangladesh is positioned to capture that growth — or whether it continues to serve primarily as a point-to-point market where foreign carriers extract most of the value — will be determined by fleet expansion, airport operations, and the policy environment over the next five years.

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