Shortage of five to six lakh seats driving up ticket prices as travel agencies face strict new regulations threatening 70% closure rate.

Bangladesh’s aviation market is facing a serious imbalance, largely because the demand for air travel far exceeds the available supply. Industry insiders estimate that the country experiences a shortage of nearly five to six lakh airline seats, a gap that naturally pushes ticket prices upward. This pressure is intensified by manipulative practices in the market, where some individuals purchase tickets for around TK 50 thousand and later resell them for as high as TK 80 thousand. Although the law clearly states that no agent is allowed to charge more than 7% markup above the actual ticket price, monitoring and enforcement remain weak, allowing these practices to continue.

Burden of these inflated airfares falls mainly on migrant workers, who make up almost 80% of Bangladesh’s international air passengers. Their mobility depends heavily on travel agencies, but the industry itself is now caught in uncertainty. Bangladesh has around 6,200 registered travel agencies, of which about 4,200 are members of ATAB. However, only 800 of these agencies are IATA-approved, meaning most agencies cannot purchase tickets directly from airlines and must rely on agent-to-agent transactions.

This dependency becomes especially alarming with the proposed regulatory changes. Under the new rules, agencies must show annual ticket sales of at least TK 50 lakh to renew their licenses, a requirement that many small and medium-sized operators fear they cannot meet. Further pressure comes from financial obligations: while securing IATA approval already requires a minimum deposit of TK 10 lakh, the new ordinance proposes a mandatory deposit of 10 lakh taka for regular agencies and an even heavier deposit of TK 1 crore for online travel agencies. Industry members warn that if these conditions come into effect, nearly 70% of existing agencies may be forced to shut down, threatening the entire structure of ticket distribution and pushing airfares even higher due to reduced competition.

Airfares departing from Bangladesh remain unusually high across all routes due to severe supply shortages and ticket manipulation practices, according to Didarul Haque, former executive committee member of Association of Travel Agents of Bangladesh (ATAB) and Managing Director of Meraj Air International.

Demand for air travel significantly outstrips supply in Bangladesh, creating a shortage of approximately five to six lakh seats. This gap between demand and available seats allows airlines and intermediaries to charge inflated prices. Didarul Haque explained that some unnamed parties purchase bulk tickets, buying TK 10 thousand seats at TK 50 thousand taka each, then reselling them to expatriate Bangladeshis for TK 80 thousand.

"If this gap can be filled, then due to airline-to-airline competition, the fares would drop to a reasonable level," Didarul Haque said in a media programme hosted by journalist Sajjadur Rahman.

Current law prohibits charging more than 7% above actual ticket prices, yet violations remain widespread. Airlines including Emirates follow commercial logic, charging higher fares when demand allows them to meet revenue targets without adding capacity.

Bangladesh's air travel market depends heavily on migrant workers, who constitute roughly 80% of passengers. This creates a substantial market supporting four to five thousand travel agencies nationwide.

Government recently drafted Travel Agency Registration and Control Ordinance 2025, already approved by advisory council. Industry associations are protesting several provisions they claim threaten agency survival and investment.

Most controversial clause restricts business-to-business (B2B) transactions between agencies. Under proposed rules, agencies cannot purchase tickets from eight different agency categories. When agencies apply for license renewal, failure to meet conditions means denial of approval and closure.

Didarul Haque estimated nearly 70% of agencies will not survive under these restrictions. Government records show 6,200 registered agencies, whilst ATAB has approximately 4,200 members.

License renewal requires demonstrating annual ticket sales of at least TK 50 lakh, totaling TK 1 crore 50 lakh over three years. Non-IATA agencies cannot purchase tickets directly from airlines due to financial security protocols. Airlines sell exclusively through IATA channels, forcing smaller agencies to depend on IATA-approved intermediaries.

IATA approval requires depositing at least TK 10 lakh plus completing lengthy approval processes through Singapore headquarters. Many small agencies from SME sector cannot afford these requirements.

Among ATAB's 4,200 members, only around 800 hold IATA approval. Others operate across different categories, focusing on Umrah, Hajj, inbound tourism or outbound packages. These operators depend on mutual cooperation for tickets and hotel bookings. Restricting B2B transactions would collapse their business models.

Proposed ordinance also mandates security deposits: TK 10 lakh for regular travel agencies and TK 1 crore for online travel agencies. Traditional agencies never faced such requirements previously.

Government appears motivated by preventing fraud following recent incidents where online agencies collected large sums then disappeared. Online agencies previously used aggressive marketing, selling TK 50 thousand taka tickets at TK 40 thousand whilst burning capital for rapid expansion. When capital dried up, many collapsed, taking customer money.

Traditional agencies never experienced such fraud cases, partly because owners maintain visible physical presence unlike online operators.

Government recently drafted separate law requiring ticket prices be clearly mentioned on tickets themselves, specifically protecting migrant workers who need transparency about actual costs.

Source: The Business Standard.