The aviation sector takes off

Myanmar’s civil aviation sector is on the brink of explosive growth with the number of seats and carriers rising and infrastructure being upgraded.

Myanmar is the most under-served aviation market in Southeast Asia. The numbers speak for themselves. Only Brunei and Laos have fewer airline seats per capita. Myanmar has a population of 52 million, according to a World Bank estimate, and a meagre weekly capacity of just over 100,000 international seats. Malaysia in comparison has 20 million fewer people but its aviation market is 14 times larger, shows flight industry database Innovata and World Bank data.

Myanmar’s aviation sector is about to enter a major period of growth, though. Since the country’s opening under the Thein Sein government and the lifting of Western sanctions, the number of international seats soared from 49,392 a week in April 2012 to 110,000 in January 2014.

Not only the number of seats is increasing. Overflights are on the rise, too. The yearly growth of flights through Southeast Asia’s airspace is the world’s largest, at 4.5 percent.

“Three years ago about 400 planes a day crossed our skies,” said U Khin Maung Myint, a special advisor to the Department of Civil Aviation. “Nowadays the number of overflights stands at 600 per day. The number of landings has also increased. Currently 22 international carriers are flying into Myanmar.”

It won’t stop there. Under a Tourism Master Plan unveiled in 2013, Myanmar is aiming for 7.4 million visitors by 2020, more direct airlinks and new airlines. The ambitious plan includes 38 projects with a total cost of US$486.7 million, calculates the Asian Development Bank. The ADB expects the tourism sector to be worth $10 billion a year.

The master plan is one of several on the drawing board. The Japan International Cooperation Agency is helping the Ministry of Transport to prepare a National Transport Development Plan, a master plan for the transportation sector in Myanmar, which also includes a civil aviation master plan. Asked when the transport development plan will be ready, JICA told Mizzima Business Weekly it is in the final discussion phase with the government. The plan will be disclosed “hopefully within a couple of months”, JICA said.

At the Myanmar Civil Aviation Development Conference 2014 held in Yangon from March 24 to 26, Union Transport Minister U Nyan Htun Aung shed some light on the government’s efforts in his opening statement: “We have been liberalising regulations. Although the current regulations still only allow for state-owned airlines, we initiated a waiver program for privately-owned airlines and Myanmar Airways has been corporatised. We’re aiming to also privatise all domestic airports. The liberalisation of investment laws and aviation rules leads to more opportunities for investors and the forming of partnerships.”

U Tin Naing Tun, the director general of the Department of Civil Aviation, told the conference that Myanmar has ambitions of again becoming a regional aviation hub.

“Sixty years ago Yangon was one of the most modern airports,” he said. “Airlines like KLM and BOAC flew to Yangon and Myanmar Airways had a fleet of advanced airplanes. Our dream is to make Myanmar a major logistical aviation hub in Southeast Asia again. For that to happen we have to further develop our economic rules and regulations, establish new airlinks, promote national airlines, make sure safety is up to international standards, and improve the aviation infrastructure, airports as well as human resources.”

Of Myanmar’s 33 airports only Yangon, Mandalay and Nay Pyi Taw are capable of handling international flights. The runways of the others are too short and they lack the necessary security facilities.

Air Bagan, owned by tycoon U Tay Za, and one of Myanmar’s eight airlines, says it carries about 300,000 passengers a year. Most Air Bagan flights are to domestic airports and that’s exactly where the biggest challenges lie, said Air Bagan spokesperson Ma Yin Myo Tint. “The aviation infrastructure is in dire need of an update,” she said. “Especially domestic airports like Nyaung Oo, Heho and Thandwe, which receive many foreign travellers the whole year round, are outdated. Terminal buildings, check-in counters, internet and fuel supply services should be modernised.”

Several regional airports are in the process of being upgraded. The apron at Heho, Nyaung Oo and Myeik is being expanded, and the runways at Sittwe, Kyaukpyu and Coco Island are being extended. The terminal at Thandwe airport is also being expanded.

Yangon International Airport is still the main aviation hub in Myanmar. The airport was developed in 1947 as the Royal Air Force’s Mingaladon Airfield and in the post-war years was one of the many stops on flights to Europe from Bangkok, Singapore and Australia. An upgrade saw a much-needed new international terminal open in 2007. It will be upgraded again within the next two-and-a-half years by Pioneer Aerodrome Services, a subsidiary of Asia World, the company that operates the airport. Japan’s Mitsubishu and Jalux will overhaul Mandalay International Airport.

Bigger developments loom just over the horizon. About 96 kilometres (60 miles) northeast of Yangon, near Bago, Hanthawaddy International Airport is due to materialise in 2018. In August 2013 the government announced that South Korea’s Incheon International Airport Corporation had won the tender for the $1.5 billion contract to build the airport. The consortium hit trouble, though, when financing proved difficult.

“They were asked to resubmit their budget; the deadline is in April,” said U Khin Maung Myint.

Three other consortia, led by Singapore and Japan’s Yongnam, Japan’s Taisei Corporation and France’s Vinci Airport, have been asked to consider funding options as well, while the government will apply for official development assistance (ODA) to fund about half of the project. It will guarantee the cheaper ODA-loans, but the developer has to take responsibility for the interest payments. The hiccup means that the projected completion date of 2018 will not be achieved.

One of the pillars of the Civil Aviation Masterplan is to establish direct flights to destinations in Europe, Australia and the United States. The direct flights will save hours in air time because they will eliminate the need to travel via Bangkok, Singapore or Doha, Qatar.

When will Myanmar have direct flights to Europe, the US and Australia?

“It will happen soon,” U Khin Maung Myint said. “Currently we are discussing direct flights with Air France-KLM,” he said. “KLM has quite a bit of history in Myanmar. They flew to Yangon until 1979. The follow up talks are in May. It might be that an agreement will be reached then. I’m sure other airliners will follow suit soon after.”

The DCA said Yangon International Airport can accommodate larger aircraft, such as those used on intercontinental routes. The runway is specifically designed to withstand the weight of bigger planes, up to the Boeing 747-200. So technically there should be no problem.

But will the capacity be there? After 2015 a huge increase in passengers – businesspeople and tourists – is projected. Does Myanmar have the capacity to handle such an influx? U Khin Maung Myint is optimistic. “Why not? Within two-and-a-half years the capacity of Yangon International Airport will have been upgraded from 3.5 million passengers now to 6 million. We’re ready for the next step.”

Some challenges remain. Safety is still a concern in Myanmar aviation, with the deputy director of DCA, U Win Swe Tun, even admitting in the New York Times that the aviation incident rate in Myanmar “is nine times as high” as the global average. And some say that too many international airlines have entered Myanmar at once. Global aviation consulting firm CAPA predicts the number of carriers will shrink in the coming years, when some of them merge or die off, because additional capacity outstrips demand (see sidebar).

Aviation in Myanmar is surely taking off, but the scenario might be one of two steps forward one step back.

Source: Mizzima Myanmar

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