Domestic airlines will not raise airfares yet despite rising fuel prices

Despite rising global oil prices, domestic airlines have no plans yet to raise airfares to compensate for higher jet fuel costs. They said this will help encourage domestic air travel while the number of foreign travelers within the country is still low.

“We haven’t increased our fares even though fuel costs have risen. We have no plans to change the air fares now because we are trying to attract more travelers,” Daw Aye Mra Tha, general manager of Air Kanbawza (Air KBZ) told The Myanmar Times. Air KBZ operates flights to 11 domestic destination using six ATR-72 aircraft.

Due to rising oil prices and the weakening kyat, the cost of importing jet fuel has increased for local airlines. U Zaw Min Aung, deputy CEO of Golden Myanmar Airlines, said his airline has considered raising airfares to cover the higher cost of jet fuel but finally decided against it.

“If we increase our airfares, the local people may resort to other options such as taking the bus. That is why we cannot afford to raise ticket prices especially since we have been relying more on local travelers given that the number of tourists has fallen,” he told The Myanmar Times.

In addition, domestic airfares are priced in US dollars or converted to kyat based on the prevailing exchange rate. Now that the dollar is stronger, even a small increase in airfares would be a lot of money for local people, U Zaw Min Aung said.

The rising price of jet fuel could add further cost pressures to Myanmar’s already struggling airline industry.

Even without factoring higher oil prices, which are now around US$85 a gallon, the price per gallon of jet fuel in Myanmar is almost $1 higher than in Singapore. This is because there is currently just one permitted supplier of jet fuel in the country- a JV between Puma Energy and State-owned Myanmar Oil and Gas Enterprise.

Other factors also contribute to airlines’ high operational costs, such as high aircraft maintenance fees and limited refueling infrastructure. Of the 28 domestic airports in Myanmar, only eight offer aircraft refueling facilities. This is why it is common for aircraft to make stopovers during long-haul domestic flights, for instance from Yangon to Lashio, since Lashio does not have refueling facilities.

Already, four out of the country’s 10 airlines have had to clip their wings as losses mount. Last month, Air Mandalay, which had been in service for 24 years, stopped all flights and charter services in order to restructure its business. Air Mandalay is the fourth domestic airline to be suspended after Air Bagan, Apex Airline and FMI Air.

SOURCE: MYANMAR TIMES

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