Home' Asian Aviation : AAV April 2019 Contents 32 AsianAviation | April 2019
Since Myanmar allowed its landmark open parliamentary elections and freed hundreds of political
prisoners in 2012, the Southeast Asian country, once under strict military rule, has liberalised one
industry after another. Aviation is no exception, as Ralph Jennings discovered in Yangon.
TEN COMMERCIAL AIRLINES HAD REGISTERED in Myanmar
as of 2016 to keep pace with economic growth. Despite the earlier
enthusiasm for aviation, Myanmar ’s airlines are starting to shut down
or suspend flights indefinitely at the risk of losing money. The civil
aviation market, still poor on the whole, lacks the passenger loads to
let so many airlines profit. But loads are slowly growing and giving
a new chance to the airlines that remain.
“If you’re telling me a market like Myanmar has seven or 10
airlines, that’s too many,” said Paul Yong, equity research vice
president with DBS Bank in Singapore. “It seems to me they do
need to go through some consolidation.” Just four dominant airlines
operate in each of the world’s top two civil aviation markets China
and the United States, Yong noted.
The total number of carriers in Myan-
mar had fallen to eight a year ago last
February and five as of February this
year, said Brendan Sobie, chief ana-
lyst with the CAPA Centre for Aviation
market research organisation. Five is
still too many for the 3 million passen-
gers who fly domestically every year,
“Load factors have been and remain
very low in Myanmar,” he said. “ They
are well below industry norms for both
domestic and international. I would
expect decent growth over the next
few years. But the rate of growth may
not be as fast as what was experi-
enced earlier this decade as the market opened up.”
Dominant airlines include Myanmar ’s largest private carrier,
Air KBZ , a nine-year-old unit of Kanbawza Bank, its sister carrier
Myanmar Airways International and the 71-year-old flagship, gov-
ernment-owned Myanmar National Airlines. The other two are
Golden Myanmar Airlines and Yangon Airways. Of the two that
quit flying last year, Air Bagan had operated since 2012 and Apex
Airlines since 2015.
Airlines are largely chasing foreign passengers now because
they ’re allowed to charge them three times the airfare that domes-
tic passengers pay, said Ye Myint Aung, chief operating officer of
Yangon-based ticketing agency, Sonic Star. Other organisations
in Myanmar also charge foreigners higher prices. “In order to get
profitable, these airlines have to go after the foreigners,” Ye said.
But domestic airlines struggle for lack of fleet sizes, marketing
and foreign customer loyalty to compete on international routes
with carriers based in other Asian countries, analysts say. In China,
a long-time source of investment in Myanmar, “Chinese airlines
have extremely strong brand loyalty and therefore it’s unlikely that
the local Myanmar-based carriers who are trying to compete in this
new market will establish any significant presence,” said John Grant,
director of JG Aviation Consultants in the United Kingdom.
Eleven airlines, including some based in China, fly nonstop today on
26 China-Myanmar routes. Those routes were the top source of last
year ’s 2 percent growth in international passenger traffic for Myanmar,
Sobie said. They were flying just six routes a year ago.
Almost all Myanmar-based airlines
have found profitability “unachievable
this decade”, Sobie said in a February
2019 CAPA report, but those still flying
should be able to speed expansion.
Air KBZ aims to expand its fleet by
50 percent this year to overtake Myan-
mar National Airlines as the country ’s
biggest carrier, Sobie said. Myanmar
Airways International plans to double
its fleet in 2019, he added. It struggles
to make money now due to a small
fleet size. Airlines contacted for this
report declined comment.
“I’m not sure if any of the airlines in
existence in Myanmar now are prof-
itable, but I imagine their losses are
more manageable now with less competition,” said Shukor Yusof,
founder of Malaysia-based aviation consultancy Endau Analytics.
KBZ and Myanmar Airways International are “revamping their fleets
and network” to meet growth in both domestic and international
travel, he added.
Passenger loads are already increasing. The 3.7 million travellers
logged in 2013 grew steadily to 6 million in 2017, according to the
Airports Council International World Annual Airport Traffic Report.
But domestic aviation declined 5 percent last year.
Any future airline consolidation will be tough because some parent
companies are using airline revenue to fix problems in their overall
accounts, one source said. Airlines instead might do business dif-
ferently on regional routes to “develop partnerships overseas and
change their network structures,” he said.
▲ Despite the earlier enthusiasm for aviation, Myanmar’s
airlines are starting to shut down or suspend flights
indefinitely at the risk of losing money.
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