News Backgrounder
All eyes on Myanmar
Government recognition for democracy leader, Aung San Suu Kyi, a breakthrough for its aviation industry
July 1st 2012
The new found freedom of the leader of Myanmar’s democracy movement, Aung San Suu Kyi, has also opened doors for the aviation industry. Read More »
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| Myanmar Airways: looking to expand its horizons in the region |
While a number of international carriers have launched or increased services to Myanmar others are clamouring to do business with what is seen as Southeast Asia’s most underserved market.
Not everyone thinks they will be successful. “Many have expressed interest, but few will be chosen,” said Shukor Yusof, of Standard and Poors Equity Research division in Singapore. “The military government will give access initially to those who have been friends with the country in the last decade; Thailand, Malaysia, Singapore and China.”
Within the country, while its national carrier, Myanmar Airways International (MAI), is on an expansion drive, the government is working on overcoming the greatest obstacle to the growth of its aviation industry – the lack of airport infrastructure.
Myanmar has 49 airports, three international and 46 domestic. Government is planning to privatize its domestic airports.
“Privatization and increasing competition are essential to accommodate this potential growth,” said analyst Ahmad Maghfur Usman, of OSK Research in Singapore.
Work is underway at Myanmar’s largest facility, Yangon International Airport (YIA), to increase its capacity from 2.7 million passengers a year to more than 3.8 million annually. To cater for growing international interest, the government is looking to upgrade a number of domestic facilities into international airports.
Around US$4 million will be invested in Dawei airport, serving the Tanintharyi region, to bring it up to international standards. Other projects are in the pipeline.
Myanmar is seeking overseas investment for airport projects and has been talking to potential investors in Japan and Singapore. “Myanmar is starting from a low base hence there are plenty of opportunities [for investors]. It will be inexpensive to set up projects. Further down the road Myanmar has the potential to be an Asean powerhouse if reforms are on track,” said Yusof.
In addition to its national carrier MAI, Myanmar has six domestic carriers. Analysts see growth among the local carriers as being slow. “Their purchasing power is not there yet,” said OSK’s Ahmad.
Myanmar is regarded as a key market for low-cost carriers (LCCs). Said Yusof: “There are many Myanmar workers in Singapore, Kuala Lumpur and Thailand, all potential low-cost flyers. These would be the key centres for demand for an LCC serving Myanmar. Once [Asean] Open Skies is launched in 2015, I anticipate a greater flow of traffic into the country, mainly for business and tourism.”
Four of Asia’s leading LCCs are already using YIA. Jetstar Asia and SilkAir fly to Yangon from Singapore, and AirAsia and regional subsidiary, Thai AirAsia, service Yangon from Kuala Lumpur and Bangkok respectively. In addition to Yangon, all of the carriers except Thai AirAsia are reportedly exploring additional routes to secondary cities in Myanmar.
AirAsia Group chief, Tony Fernandes, has said his carriers are interested in Kuala Lumpur – Mandalay and Bangkok – Bagan services.
China’s ‘Big Three’ carriers, China Southern Airlines, China Eastern Airlines and Air China are operating to Myanmar from five Mainland destinations: Beijing, Guangzhou, Luxi, Kunming and Nanning. Other international services will multiply with the introduction of additional destinations from Europe, the Middle East, and North Asia in coming months.
Qatar Airways will resume services to Myanmar in October from Doha using A319 aircraft. The airline suspended operations in 2008 for commercial reasons.
All Nippon Airways has expressed interest in resuming its service from Tokyo to Yangon “as soon as possible”.
Cathay Pacific Airways subsidiary Dragonair, Hong Kong Express, Pakistan International Airlines, SriLankan Airlines and Biman Bangladesh Airlines have looked at the possibility of launching routes from their hubs into Myanmar.
Meanwhile, MAI is planning to expand its overseas network. The Yangon-based carrier is reportedly assessing services to Hong Kong, Tokyo, Seoul, Delhi and Dubai. It has launched code-share services with Jetstar Asia, Malaysia Airlines and Thai Airways International.
A big questionmark is the size of the carrier’s fleet - four A320s and one A321.
Increasing the fleet size also raises the question of securing financing, although political sanctions against Myanmar are being eased by some countries. “Leasing, wet or dry, will probably play a major role instead of plain vanilla funding,” said Yusof.
