Golden Myanmar InternationalMyanmar Golden International
Gold Myanmar is planning national and international growth as the fleets grow from one to four planes.
Gold Myanmar Airlines is gearing up for a big growth period as the low-cost start-up airline is adding a second Airbus 72-600 and two A320s over the next five month. Most of the extra power will be used to extend Golden Myanmar's internal grid, which currently comprises only one line. It will also be adding capacities on its only two international flights, Yangon to Bangkok and Singapore, but has chosen not to launch new international liner shipping at this stage of its evolution.
Golden Myanmar is the first LCC in Myanmar to be well placed to take full benefit of the enormous opportunity in its own area. However, there are also a number of challenging factors, as fierce competitive pressure on the Myanmar region has led to overcapacity on most national and international lines. In January 2013, Golden Myanmar took off with a 12-year-old Airbus Airbus Airbus A320, which ILFC lease in a 180-seater aircraft layout.
It took off inland between Yangon and Mandalay - by far the biggest internal flight in Myanmar. At the beginning of Apr-2013 international connections were established with a dayly connection to Singapore. The airline's day-to-day flight to Bangkok Suvarnabhumi began in May-2013, taking approximately 13 hours to fly its only one.
It was originally planned to have a second Airbus A 320 by mid-2013, with Yangon planned as new services to Hong Kong and Kuala Lumpur. Myanmar has chosen to use the second Airbus A 320 to operate a second dayly service from Yangon to Bangkok from the end of October 2013 and to increase Yangon-Singapore from seven to up to 13 flights per week.
A second inland connection from Yangon to the new capitol Nay Pyi Taw will also be added. It is also considering chartering from Yangon to Gaya in India, a favourite place of Buddhism as well. These extra services to Bangkok and Singapore will increase Golden Myanmar's market shares in the two major Myanmar cities and offer its customers a cheaper and more competitively priced flight plan.
Our second trip to Bangkok is in the mornings. Second Singapore radio will arrive in Yangon just before Midnight in the evenings to complement the present service, which departs from Yangon in the mornings and Singapore in the afternoons. However, both are highly competive and demanding in comparison to other large international short-haul services within Southeast Asia.
Tigerair is now flying to Yangon-Singapore from three Lufthansa Technik flight centres, following the start of day-to-day flight operations on October 1, 2013. Yangon Singapore has more than doubled in the last two years, from approximately 4,400 one-way seating per week in November 2011 to approximately 10,000 per week in November 2013. Year-on-year, CAPA and Innovata reported that seating capacities have increased by more than 50% from approximately 6,500 per week in November 2012.
Aside from Tigerair's recent take-off, Singapore Airlines took over seven of SilkAir's 16 scheduled services at the end of October 2012. SIA currently runs nine services a week and, according to Innovata, will be adding two more from the end of October 2013.
In the course of 2012, Jetstar Asia also gradually switched its Yangon services from three a week to one a day. Since the end of 2012, Jetstar Asia has been flying every day and has added two additional, nine flight per week to its on-line booking system from the end of November 2013. It also cooperates with Myanmar Airways International (MAI) on the Yangon-Singapore itinerary.
Headquartered in Singapore, MAI has cut its own capacities and currently runs 10 scheduled services a week. Up to now, the airline has carried out two non-stop services to Singapore every day and until the beginning of the year was offering a third service via Bangkok to Singapore. Golden Myanmar is ready to overhaul MAI as the biggest Burma airline in Singapore with its overflights.
MAI's 10 week-long Airbus Airbus A320 services will account for only about 16% of the overall Yangon-S Singapore flight fleet from November 2013, according to CAPA and Innovata. That is equivalent to a 36% stake in Nov-2012 and 43% in Nov-2011 (excluding one-stop via Bangkok), as MAI has reduced capacities while the overall store has more than doublé.
SIA Group' s stake in the Singapore Yangon markets has also declined with the entry of other airlines. However, SIA/SilkAir has reduced the reductions through additional capacities. On the Yangon - Singapore line, the group will have a 35% lead in terms of capacities in November 2013, up from 45% in November 2011, when only SilkAir used it.
On the basis of the 13 monthly departures, Golden Myanmar would account for 23% of the total fleet, up from about 18% at present. However, Golden Myanmar now intends to fine-tune its timetable and is expected to fly 12 times a week. When the airline has a frequent flyer, it is considering stationing its plane in Changi for several hour so that it can make the early bird trip from Yangon and the long night trip from Changi.
This extra service will also give Golden Myanmar the biggest LCC and most recent LCC departures from Singapore. However, in view of the fierce competitive environment and the fact that the first leg of the journey is not yet fully developed in terms of utilisation, it will be a challenge to take up the extra capacious.
Myanmar' s Singapore airport grew significantly: in 2012, Changi Airport recorded a 23% increase over the previous year to 406,000 people. However, the increase in consumption has not been as rapid as the increase in production capacities. That is not a sustained number, and 25% per year transport increase is not possible in Myanmar's fast-growing population. In the end, there may be a corrective effect on the markets.
Singaporean airlines have an edge over Myanmar-based airlines because they can take full benefit of the growing popularity of Myanmar from nonstop destinations such as Indonesia, the Philippines and Australia. Both Tigerair and Jetstar Asia now have access points and are offering more to Singaporean departures for the domestic travelers, while Golden Myanmar is focusing mainly on Burma travellers.
Myanmar Golden has the benefit of providing Myanmar's home network, especially after its two ATR 72' went into operation in the first quarter of 2014. However, Singapore's request for other Myanmar locations is still restricted. While Singapore-Mandalay is a one-stop solution, Golden Myanmar has not seen much non-stop air travel on this itinerary.
Golden Myanmar, after having offered an immediate flight, is now serving the Singapore-Yangon-Mandalay one-night outward leg as it modified its flight plan for Yangon-Mandalay a few month ago and stationed its Airbus 320 in Yangon instead of Mandalay. Mandalay to Singapore will continue to offer an immediate one-stop-services.
Yangon Bangkok is a larger country, but has experienced a similar inflow of capacities in the last two years. According to CAPA and Innovata, there will be over 21,000 one-way seating places a week between Yangon and Bangkok from January to 2014. This latest rise is due to the launch of Nok Air's services, which will begin with four week-long services on 1 November 2013, but, according to Innovata, will rise rapidly to a single day interval in early December 2013 and two days' intervals in early January 2014.
Bangkok Airways will add a forth dayly service and Golden Myanmar a second dayly service from the end of October 2013. Only about a year ago Bangkok Airways started its third day trip to Yangon. In 2H2012, Thai AirAsia and Thai Airways also launched a third day service to Yangon.
Since Thai Airways will operate all three widebody services, it is the leading airline with a 38% stake in Widebody and will be reduced to 30% in January 2014 as three of its competitor airlines grow. At the moment MAI flies twice a day to Bangkok, but has lost some of its shares due to the relatively steady capacities in the last two years.
Like the Singapore crowd, Golden Myanmar will become Burma's biggest airline after Bangkok by adding a second dayly flight rate, which means 2,520 one-way seating per week for the LCC as opposed to less than 2,300 for MAI. In January 2014, Golden Myanmar will hold approximately 12% of the Yangon Bangkok Yangon Yang-on.
Also Nok will take about 12%, while Thai AirAsia will take about 17%, which gives 41% to all of the group. Besides Thailand's 30% stake, the other legacy on the Thai air transport markets - Bangkok Airways and MAI - will represent 18% and 11% of seating capacities respectively. Like in the case of Yangon-Singapore, the Bangkok Yangon markets are benefiting from an uptrend.
Both Thai Airways and Bangkok Airways are highly dependent on the aftermarket, which gives them a certain edge over the airlines that depend exclusively on the Myanmar-Thailand area. Part of the transport was also branched off from Yangon-Bangkok, as Mandalay and Nay Pyi Taw began to provide connections directly to Bangkok.
Last year Thai AirAsia, Bangkok Airways and Thai Voyager began all flights to Mandalay. Tangkok Airways has taken a flight with Thai AirAsia to Nay Pyi Taw to take off from the end of October 2013 also Bangkok-Nay Pyi Taw. Recently Nok also connects Thailand's local targets with Myanmar.
Consequently, overall capacities on the Myanmar-Thailand and Bangkok markets have grown even more rapidly than in Yangon-Bangkok, with an overall growth rate of 62% between January-2012 and January-2013 to around 26,000 disposable seating units per week. Gold Myanmar offers a one-stop service between Nay Pyi Taw and Bangkok in both ways. However, with Thai AirAsia and Bangkok Airways both providing non-stop services in this and Mandalay's markets, Golden Myanmar's options in the one-stop or interconnection markets will be narrow.
Eventually, Golden Myanmar could reduce Bangkok by converting some or all services to ATR 72-600. Because of its shorter flying time (just over an hour), it is a more economical turboprops line, especially when there is not enough air traffic to fill 180-seat A320 aircraft in the face of fierce competitive conditions.
Some of Bangkok Airways' Yangon services are already operated with ATR 72. The ATR 72 night service to Bangkok will also increase the utilization of Golden Myanmar's turboprops due to the difficulty of full utilization of domestic-only planes at Myanmar's local airport due to a shortage of backlight.
However, with the ATR 72 on Bangkok, Golden Myanmar should find another international itinerary for the Airbus A3220. This would be a challenge in view of the present state of the markets. Others are already overloaded. Initially Golden Myanmar wanted to fly to Kuala Lumpur and Hong Kong with its first twin Airbus A320s.
However, the airline has at least for the time being chosen not to operate on the Yangon - Kuala Lumpur and Hong Kong route. Kuala Lumpur and Hong Kong are now among the biggest destinations from Yangon, but they have already recorded an inflow of capacities and are highly dependent on incoming trade, a segment of the industry Golden Myanmar is struggling with as it does not yet have a recognized trademark outside Myanmar.
Myanmar has so far mainly provided departing transport with a mixture of recreational, commercial and migratory work. Last year Malaysia Airlines and AirAsia added a second dayly flight to Yangon (although the second AirAsia flight does not serve certain periods of the year). Being on the track with MAI (although with a less than everyday service) it would be hard to keep a forth carry.
Yangon-Hong Kong will now be operated with four Cathay Pacific Dragonair operated four daily Amtrak 321 services, starting the service in January-2013. At this point in time, the size of the local markets is probably too small to hold a second airline. Drago Air/Cathay is better placed to service the Brazilian airline as Yangon services are designed to maximize services beyond Hong Kong, also to North Asia and North America.
Dragoonair is also well placed to meet the increasing demands for Myanmar as a travel destinations, as it works in close cooperation with Hong Kong-Agent. Whilst Golden Myanmar, with its Bangkok and Singapore lines, has been able to increase its international arrivals, it should be much more dependent on incoming transport for each new international line.
It has a well-documented, non-Myanmar, regional name. Working with an LCC group in Asia could help Golden Myanmar open up new international sales and sales opportunities. The LCC groups in Southeast Asia are interested in the Myanmar area. Since Golden Myanmar has already started and is the only LCC in the state, it would be an appealing destination.
The home is more attractive as an autonomous LCC with a strong regional presence. ATR 72 allows Golden Myanmar to be more effective in the home markets. There are only a few airfields in the state that can handle the A320, and it is difficult to fill 180 slots even on the largest internal flights.
Gold Myanmar rents two new ATR 72-600s from Air Lease for shipment in January-2014 and March-2014. It is the airline's intention to deploy the turboprop first on internal flights, with international flights - Bangkok and possibly other Thai locations such as Chiang Mai - being taken into consideration at a later stage.
Gold Myanmar is planning to station one of its ATR 72 in Yangon and one in Mandalay. It has not yet chosen its first turbo-prop destination, but is likely to use the ATR 72 to compete on the major internal flights. In addition to Yangon-Mandalay, which already operates an Airbus 320 to Golden Myanmar, Nyaung-u (the gate to the beloved touristic city of Bagan), Heho, Thandwe and Dawe are the most important internal flights of Yangon.
The most important internal trails from Mandalay are Mandalay Nyaung-u, Heho, Tachilek and Myitkyina. ATR 72 is already being operated on these national services by the other Myanmar airlines: and Myanma Airways. There are also extra frequency bands between Yangon and Mandalay to come.
Yangon-Mandalay is a relatively large player but a higher speed turbo-prop mode is a natural choice. Yangon-Mandalay's utilisation rates are generally not enough to sustain inland service on the Airbus A 320 or A321s. It is anticipated that Asian Wings will put its Asian Wings 321 back into international service. Myanmar also plans to fly the Yangon-Nay Pyi Taw aircraft using the Airbus 320, which will take off with a scheduled service at the end of October 2013.
However, ATRs would be more natural, as this is a relatively low-consumption, relatively small distance (one hours on a turboprop), although the future growth of the equity is likely to have long-term growth opportunities. Yangon-Nay Pyi Taw is currently operated with regular services from Air Bagan, Air KBZ and Asian Wings, which together serve only 11 ATR 72 services a week.
For the time being at least, the ATR 72 is by far the most frequent airplane in Myanmar. Gold Myanmar realized that it also needed ATR 72 to be inland. Although Golden Myanmar is known as LCC, it generally does not provide much cheaper rates than its locally based rivals.
Since there is no trusted access to the web, all companies flying to local airfields, some of which will be served by their new ATR 72 fleets from 2014, use the same check-in service and have to depend on them. Selling expenses are similar for all Burma's airline companies, as they are highly dependent on tour operators due to Myanmar's low web traffic throughput.
Just under 20% of Golden Myanmar's total revenue is earned on-line. However, almost everything comes from the Bangkok and Singapore market. There is also a limit to the possibilities of increasing capacity utilization, as most of Myanmar's airfields are not fully operational at all. Gold Myanmar is planning to use the ATR network in about 8 hours.
That is still better than most of its rivals (Golden Myanmar will be the 7th ATR provider in the country), as Myanmar's occupancy rate is relatively low on the basis of the mean. It will be difficult to increase the capacity utilization of the ATR 72 aircraft without the international operation or the expansion of further hubs for night use.
On the international flight markets, Golden Myanmar is able to differentiate itself from Burma's only other international airline, MAI, by operating the A320 in an economic set-up and charging fees for meals, beverages and fare. Myanmar airlines run a small number of Myanmar airlines (typically between two and five) in the same economic configurations, giving them the same cost and efficiency in terms of parts and upkeep.
It also outperformed its competition by offering free check-in luggage for national and international air travel. There is no point in the LCC purely being acceptable to the regional markets. There are five international LCC' s that serve the Myanmar region and they can come with a different type of products, as they mainly transport international customers.
Air Asia will remain the biggest LCC trademark in Myanmar's international arena, with a nearly 50% stake in international LCC production in December 2013, versus approximately 27% for Golden Myanmar. In Myanmar, there are great prospects for further LCC growth on both the national and international stage. Currently, only 28% of Myanmar's international seating capacities are held by an LCC, and the only internal Golden Myanmar service gives the local airlines a virtually non-existent LCC coverage level.
However, the intrusive rates in the country will rise significantly as Golden Myanmar will add ATR 72, while the international intrusive rates will also rise slightly due to growth in Golden Myanmar, overseas NCCs and possibly the introduction of new locally based ICCs. In the face of fierce competitive pressure and the absence of possibilities for Myanmar airlines to pursue a purely LCC approach, there will be a challenge.
However, as times go by, the Myanmar Golden should be able to take full benefit of its First Match advantages in Myanmar's up-and-coming LCC area.