On January 1, 2026, Bangladesh's government published amendments to the Travel Agencies (Registration and Control) Ordinance, 2026. Issued by presidential order, the ordinance arrives after at least three online travel agencies collapsed between 2024 and 2025, allegedly defrauding customers of hundreds of crores in ticket payments. The government earlier published a draft of the same to get feedback from the stakeholders.
The regulatory response is comprehensive, addressing beneficial ownership transparency, false bookings, pricing opacity, and financial guarantees. These are legitimate concerns. But the ordinance also exemplifies a recurring pattern in Bangladesh's regulatory evolution: well-intentioned interventions that impose requirements calibrated for sophisticated, well-capitalized operators on a market where most participants are small, resource-constrained businesses operating on thin margins.
The result will almost certainly be market consolidation, the exit of smaller players, and higher barriers to innovation. Whether this represents good policy depends on what you're optimizing for.
Let’s take a closer look.
What's in the ordinance
The amendments modify the Bangladesh Travel Agency (Registration and Control) Act, 2013, with stated objectives to "ensure customer service, fair pricing, good governance in the aviation transport sector and to prevent harassment of passengers". The core provisions include:
Ultimate Beneficial Ownership (UBO) disclosure: The ordinance introduces mandatory identification of natural persons who ultimately own or control travel agencies, regardless of corporate structure. This prevents the common practice of hiding actual ownership behind shell companies or nominee arrangements. When Flight Expert vanished with customer money, authorities struggled to identify who actually owned the company. UBO disclosure addresses this directly.
B2B transaction restrictions: Section 7 now requires that when one travel agency sells tickets to another agency, these transactions must occur at "arm's length", market-rate pricing with no preferential treatment between related parties. This targets the sub-agent model that dominates Bangladesh's travel market. Of 5,000-5,200 licensed agencies, only 1,300 hold IATA accreditation. The remaining 3,700+ operate as sub-agents, buying tickets from IATA agencies and reselling to customers. The arm's length requirement makes this model significantly more difficult, effectively requiring documentation and justification for every B2B transaction.
Technical infrastructure requirements: Travel agencies mustmaintain direct connections with airlines through Global Distribution Systems (GDS) or New Distribution Capability (NDC) platforms, provide accurate real-time passenger information to airlines, andmake consolidated payments to airlines for all tickets booked. GDS connectivity costs Tk 5-10 lakh annually for small operations, according to industry estimates. Consolidated payments require working capital that most sub-agents don't have. These provisions effectively set a minimum scale threshold for viable operation.
Prohibited practices: The ordinance explicitly bans false bookings and placeholder reservations without confirmed payment, using multiple identities to circumvent penalties, misleading pricing through false promotional advertisements, andillegal sharing of airline ticketing system login credentials. Violations carrypenalties of up to one year's imprisonment and fines up to Tk 10 lakh.
Bank guarantee requirements: Online travel agencies must furnish bank guarantees of Tk 1 crore (~$85,000), while offline agencies need Tk 10 lakh (~$8,500). The Ministry justified the higher amount for online agencies based on "higher volume of transactions and greater financial risk associated with advance payments." These guarantees must be maintained continuously—if an agency's guarantee lapses, its license can be suspended.
Enhanced enforcement powers: Authorities can now suspend licenses immediately for serious violations without a prior hearing, revoke licenses permanently for repeated violations, and impose travel bans on agency owners in coordination with the Ministry of Home Affairs to prevent sudden departure. The UBO disclosure makes this enforceable across corporate entities. Registration certificates will be renewed every three years, subject to compliance reviews.
What the ordinance gets right
The ordinance addresses genuine problems in Bangladesh's travel market. UBO disclosure creates accountability in an industry where corporate structures often obscure actual ownership. The prohibition on false bookings protects both airlines (who need accurate inventory management) and customers (who need booking certainty). Consolidated payment requirements prevent agencies from using customer funds as working capital, a practice that contributed to several agency collapses.
These provisions aren't theoretical concerns. The collapse of Flight Expert, Fly Far International, and Travel Business Portal involved exactly the practices this ordinance targets: opaque ownership structures, speculative bookings, delayed airline payments, and misuse of customer funds.
The bank guarantee requirement for online travel agencies deserves particular scrutiny because it exemplifies the ordinance's fundamental flaw: imposing requirements that assume scale and sophistication in a nascent market.
Consider the economics. A new online travel agency might process Tk 50 lakh to Tk 1 crore in bookings during its first year. With commission rates of 3-7% on airline tickets and 10-15% on hotel bookings, gross revenue might be Tk 5-10 lakh monthly. After operating costs, net margins in year one are often negative. Tk one crore is not an expense; it's a guarantee that must be maintained continuously. But it's still capital locked away that cannot be used for operations.
Banks typically won't issue guarantees without collateral, often requiring a 100-110% cash deposit or equivalent fixed assets. This means entrepreneurs need access to Tk one crore+ in liquid assets or property, effectively limiting OTA licenses to the already-wealthy or venture-funded.
The international context makes this even more striking. Bangladesh requires approximately 24 times the capital India does, despite a similar GDP per capita. India requires ₹3 lakh (~$3,600) in paid-up capital with no separate bank guarantee beyond demonstrating this capital. Singapore, with 34 times Bangladesh's GDP per capita, requires S$50,000-100,000 (~$37,000-74,000) as paid-up capital that can be used in business operations, not a locked-away guarantee. The UK'sATOL scheme requires bonds scaled to business size, starting at £50,000 (~$63,000) for small businesses, with alternatives like joining accredited bodies that eliminate bond requirements.
This matters for innovation. High capital requirements don't just exclude some entrepreneurs; they fundamentally change who can enter the market and what business models become viable. Existing players like ShareTrip or GoZayaan, having already raised venture funding, can meet the requirement. But the next generation of founders, perhaps building AI-powered travel planning, niche travel marketplaces, or accessibility-focused travel services, face an insurmountable barrier before they can test whether their ideas work.
Modern startup methodology emphasizes validated learning: build minimum viable products, test with customers, iterate based on feedback. A Tk one crore guarantee requirement means entrepreneurs must commit massive capital before learning whether their business model works. This prevents the lean experimentation that often produces better solutions than established players imagine.
Beyond the capital requirement, the ordinance suffers from several structural problems that will limit its effectiveness and create unintended consequences.
No transition period: The ordinance imposes comprehensive requirements immediately, without phasing or transition mechanisms. Travel industry leaders specifically demanded a transitional period to allow agencies time to comply. In a market where 80-90% of transactions still happen offline through traditional agencies, many operators lack the capital, technical capacity, or institutional knowledge to comply quickly. A 12-18 month transition period with clear milestones would achieve the same end goal while reducing shock impact. Phase one could focus on UBO disclosure and basic transparency, phase two on financial requirements, and phase three on full technical compliance. Instead, the binary comply-or-exit approach will force many viable businesses to close unnecessarily.
One-size-fits-all approach: The ordinance treats a 2-person sub-agency in Sylhet the same as a large established player. Small agencies serve different market segments, operate different business models, and pose different risk profiles than large OTAs. A sub-agency doing Tk 20-30 lakh annual revenue serving local customers doesn't pose the same systemic risk as an OTA or large agency handling crores monthly.
Better regulatory design would create tiers based on transaction volume or revenue, with requirements matched to actual risk. Micro agencies could have lower guarantees (Tk 2-3 lakh) and use association-provided GDS access rather than direct contracts. Medium agencies could have standard requirements. Large agencies and OTAs could face enhanced oversight proportional to their systemic importance.
B2B restrictions eliminate legitimate intermediation: The arm's length transaction requirement for B2B sales effectively prohibits the sub-agent model. But sub-agents serve a legitimate economic function; they provide local presence in markets too small for IATA agencies to serve directly, bear customer relationship costs that large agencies don't want, offer credit to customers who lack cards for online booking, and provide language support and local knowledge.
Rather than prohibit B2B sales, the ordinance could regulate them properly: require disclosure so customers know they're dealing with intermediaries, mandate transparency about base fares and markups, create accountability by making suppliers jointly liable for sub-agent misconduct, and set commission caps to prevent exploitative markups while allowing reasonable margins. This would address actual harms (opacity and exploitation) without eliminating a functional market structure.
Enforcement mechanisms remain unclear: The ordinance specifies what agencies must do, but not how authorities will verify compliance or what enforcement capacity exists. Bangladesh has 5,000+ licensed agencies spread across the country. The Ministry of Civil Aviation's enforcement capacity is unknown but almost certainly insufficient for comprehensive oversight.
Without clear enforcement mechanisms, technology-enabled compliance monitoring, defined inspection schedules, standardized penalty structures, adequate inspector staffing, regulation becomes arbitrary, applied to those who attract attention or lack connections, while others operate with impunity.
The ordinance needed to include mandatory integration with a central reporting system for all ticket issuances, real-time transaction monitoring to detect anomalies, automated flags for suspicious patterns, published criteria for priority enforcement, and budget allocation for hiring and training inspectors.
The ordinance is now law, but the regulation should be iterative. Three categories of changes would address its most serious shortcomings:
Immediate adjustments: Announce a 12-month transition period with phased requirements and specific deadlines for each category. Establish a tiered licensing structure based on annual revenue or transaction volume, with differential requirements for micro, small, medium, and large agencies.
Maybe create a central compliance portal where customers can verify licenses, agencies can submit UBO disclosures, and complaints can be filed. Make this publicly accessible and mobile-friendly.
Medium-term reforms: Develop a regulatory sandbox framework allowing experimental licenses for novel business models, with clear boundaries on transaction volumes and duration but enhanced reporting requirements during the test period.
Reform B2B transaction rules to replace prohibition with transparency requirements, allow sub-agents if they clearly identify themselves to customers, disclose pricing breakdowns, accept joint liability with their suppliers, and operate within reasonable commission caps.
Structural improvements: Implement technology-enabled monitoring requiring all agencies to integrate with a central transaction reporting system, building analytics to detect fraud patterns and create automated alerts. Build enforcement capacity by allocating resources where necessary, and creating partnerships with the Bangladesh Bank and BTRC for data sharing.
Commit to an annual review of requirements based on implementation experience, with formal feedback mechanisms from agencies and customers, publishing enforcement outcomes data, and adjusting thresholds based on evidence rather than assumptions.
Scale bank guarantees to business size, and allow alternatives like insurance policies, trust accounts, or association guarantee schemes.
The most critical reform is reconsidering the Tk one crore guarantee for online agencies. A more rational approach would scale bonds to actual business size based on annual revenue or booking size: startup tier (annual bookings under Tk 50 lakh) requires Tk 5 lakh guarantee, growth tier (Tk 50 lakh to 5 crore) requires Tk 25 lakh, established tier (over Tk 5 crore) requires Tk 1 crore. This achieves consumer protection proportional to risk while preserving space for innovation and new entry.
In its current form, the ordinance will accelerate consolidation in Bangladesh's travel market. This was already happening, digital platforms gaining share, larger agencies absorbing smaller ones, commission pressures squeezing margins, but the regulatory requirements will dramatically speed the process.
As former ATAB president Manzur Morshed Mahbub warned, the amended provisions could severely impactnearly 5,000 non-IATA agencies. Based on similar regulatory tightening in other sectors, 30-50% of sub-agents will likely exit within 18-24 months of effective enforcement. Some will close voluntarily, others will continue operating in a gray market, hoping that enforcement is weak.
Survivors will consolidate around larger agencies through franchise models, white-label platforms, or direct acquisitions. Large IATA-accredited agencies can now offer smaller operators access to GDS connectivity, payment processing, and compliance infrastructure in exchange for becoming distribution nodes in a larger network. The value small agencies capture will drop; they'll operate on whatever commission the platform provides rather than their own markup.
For online travel agencies, the ordinance creates both advantages and risks. ShareTrip, GoZayaan, and similar players already have the infrastructure the ordinance requires. They can absorb compliance costs across large transaction volumes, driving down per-unit costs that traditional agencies cannot match. But they also face the Tk one crore guarantee requirement and heightened regulatory scrutiny. The real winners may be large IATA agencies that can pivot to providing B2B infrastructure for smaller agencies while also building their own online capabilities.
Consumer outcomes will be mixed. Affluent urban customers booking online or through established agencies will benefit from enhanced transparency, bank guarantees, and stricter oversight.
But customers in secondary cities who rely on local agents may face reduced access if those agents exit.
Price-sensitive customers who valued competition among many players will likely see higher prices as the market consolidates and remaining players gain pricing power.
The travel ordinance exemplifies how Bangladesh approaches business regulation in the digital era. The pattern is consistent across sectors: wait for market failures to emerge, respond with comprehensive regulation addressing multiple issues simultaneously, impose requirements that assume significant scale and sophistication, leave enforcement details somewhat ambiguous. This often creates unintended second-order consequences, creates entry barriers for new players, favors the incumbents, stifles innovation and competition, and eventually becomes a reason for disservice to customers.
This differs from other regulatory models. Singapore regulates early and precisely, with clear cost-benefit analysis and often regulatory sandboxes for new business models. India lets things run somewhat wild, regulates reactively, but maintains flexibility for innovation and acknowledges enforcement capacity constraints. China regulates tightly but pragmatically, with the goal of creating national champions.
Bangladesh's approach combines regulatory ambition without commensurate enforcement capacity or strategic industrial policy. The result is often rules that look good on paper but face implementation challenges, creating strategic uncertainty for entrepreneurs and investors.
You can't ignore regulation because penalties are real, but you also can't assume perfect enforcement because capacity constraints are real. The optimal strategy becomes compliance plus regulatory relationships, which privileges those with capital and connections.
As Bangladesh's digital economy grows, e-commerce, fintech, logistics, and healthcare technology, similar questions will arise across sectors. The challenge for policymakers is calibrating regulation to market maturity. In nascent markets with low penetration and significant growth potential, an optimal regulatory strategy might focus on core consumer protection issues while maintaining flexibility for business model innovation. Premature comprehensive regulation can freeze innovation in its current form, preventing the emergence of better solutions.
The Bangladesh Travel Agency Ordinance 2026 addresses real problems with legitimate policy tools. UBO disclosure, false booking prohibition, and consolidated payment requirements all serve important purposes. The government's concern about protecting consumers after major agency collapses is entirely justified.
But the ordinance also demonstrates how well-intentioned regulation can create unintended consequences when requirements are poorly calibrated to market realities.
A more sophisticated approach would protect consumers while preserving space for innovation and competition: transition periods to allow adaptation, tiered requirements matched to actual risk, scaled guarantees proportional to business size, regulatory sandboxes for experimentation, and technology-enabled monitoring instead of just upfront capital barriers.
The good news is that regulation can evolve. However, the question is whether policymakers will approach regulation iteratively, adjusting based on implementation experience and evidence, or defensively, treating any change as an admission of error.
For entrepreneurs, investors, and agencies navigating this environment, the strategy is clear: comply where possible, advocate for sensible changes, build defensible business models, and recognize that regulatory evolution is itself part of the competitive landscape. The travel market will consolidate. Some agencies will exit. Others will thrive. The ordinance accelerates trends already underway. Those who understand this and adapt will find opportunities. Those who resist or hope for the old system to continue will struggle. Execution, adaptation, and strategic clarity still matter most.
