Mai Airways MyanmarMay Airways Myanmar
Burma Airways International launches a new stage of growth with Seoul and Osaka flights
Burma Airways Internacional (MAI) is expanding in North Asia with new connections to Osaka and Seoul. This extension expands the airline's route net to eight locations and approximately doubled its ASKs every week, increasing its small footprint in Myanmar's fast-growing but fiercely contested global destination com-pany. MAI's expanding operations will enable it to profit from the country's rapidly expanding tourist industry.
Fully privatised since 2013, MAI has not yet benefited from the enormous rate of economic development Myanmar has seen since the opening of the nation in 2011. However, the forthcoming extension is also a risk factor, as MAI will be competing in the Korean and Japanese air transport sectors with major overseas airlines and ultimately with Myanma Airways, a state-owned national airline, whose goal is to start flights to North Asia in 2015.
May is one of nine Myanmar carriers (soon to be 11 as two more are about to take off), but is the most important of them. Almost exclusively an inter-national company, MAI currently operates services to five Indian cities - Bangkok, Kuala Lumpur, Singapore, Guangzhou and Gaya. It is MAI's initial plan to operate three non-stop non-stop services a week from Yangon to Osaka.
After returning from Osaka to Yangon, the trip will stop in Phnom Penh, giving the possibility for Japanese-stayers to connect Cambodia with Myanmar. While the airline stepped onto the Kampuchean air transport route to Phnom Penh and Siem Reap in 2012, it abandoned Siem Reap in 2013 and abandoned Phnom Penh at the beginning of the year.
For the time being MAI is planning five flight per week to South Korea on a flight from Yangon to Seoul, Macau, Mandalay and Yangon. Macao is a technological station, while Mandalay is part of the itinerary, as Myanmar visitors mix Mandalay and Yangon. The only MAI inland service, Yangon-Mandalay is part of a single industry on some of its current intercontinental services.
Of Myanmar's other six are exclusively internal flights, while the other two, Air Bagan and Golden Myanmar, offer mainly internal flights with only one or two internal flights. However, some of the national airlines are now seeking to grow into the global air transport sector. Myanma Airways, which is operating local jetliners on German airlines, plans the most challenging global roll-out, but has signed to lease six 737-800 aircrafts in early 2014 for deliveries from June 2015.
Myanma Airways plans to launch its forthcoming six 737-800 aircraft, three of which are scheduled for delivery in 2015, on new Asia. Myanma Airways has also pledged to lease four 737 MAX 8 aircraft which will be shipped by the end of this decennium.
MAI's October 2014 deployment in Korea and Japan can be seen as a competitively priced answer to the Myanma Airways global rollout and re-branding, which is likely to be complete before the airline enters the global air transport marketplace. In 1993 Myanma Airways assisted in the founding of MAI and left the global air transport industry.
Since then Myanma Airways has exclusively been operating national flights. However, the authorities are now very interested in the airline resuming to provide support and assistance to increase the number of foreigners. In 2013, Myanma Airways divested its interest in MAI to one of Myanmar's biggest privately owned bank, Kanbawza Bank, thus pave the way for the company's globalization.
Karbawza already had one of Myanmar's national airlines, Air KBZ, and a controlling interest in MAI. In 2010, the KBZ Group first purchased 80% of the shares in MAI and now holds 100% of the shares. Burma Airways is not the only new entrant to MAI. Whilst the prospects of more competition in North Asia are unlikely, some of Myanmar's airlines have tried to penetrate the local global notion.
The German turbopropeller manufacturer Air Mandalay, for example, has purchased ERJ-145s, which it intends to use on its recently ordered Mitsubishi MRJ90 jetliners on intercontinental flights. Myanmar's global growth is crucial for Burma's airlines as its home base is small and highly competitive. Myanmar's home passenger traffic in 2013 was only 3.8 million.
domestically, the growth rate is 8% in 2013, but not as high as the global growth rate (32% in 2013) and not enough to help 11 companies. Apex and FMI will further increase the pressures on Myanmar's local companies, none of which is considered profit.
The two airlines will be active in Germany for the time being, but have global aspirations. Over the last two years, there has already been increased competitive pressure on these lines and MAI's position in the overall rail transport sector has been reduced. In 2013, MAI carried only 312,000 foreign travellers, a decrease of 17% over 2012, according to DGAC Myanmar that year. In 2013, MAI only reached a 12% stake in Myanmar's global markets, up from 19% in 2012.
In the last two years, MAI has cut the frequency to Bangkok, Kuala Lumpur and Singapore, while all other competing companies have expanded their capacities and in some cases gained a foothold in Myanmar. Currently MAI offers two departures a day to Bangkok, ten departures a week to Singapore and two departures a week to Kuala Lumpur.
SilkAir, Golden Myanmar, Jetstar Asia, Tigerair, Singapore Airlines and SilkAir are currently competing with MAI on Yangon-Singapore and offer a total of 67 services a week. Malaysian Airlines and AirAsia each offer two a day services to Yangon-Kuala Lumpur. MAI's current production capacities in the Yangon-Singapore region are around 19%, while in Yangon-Kuala Lumpur they are only around 7%.
MAY also offers three flight weeks to Guangzhou and three flight weeks to Gaya (based on OAG flight plans for the period September 29 to 2014). In 2013, MAI transported about 25,000 between Yangon and Guangzhou and about 25,000 between Yangon or Mandalay and Gaya. According to CAPA and OAG figures, the MAI currently represents approximately 9% of Myanmar's global seating capacities.
This figure will again be above 10% at the end of October 2014 after the start of connections to Korea and Japan. These two new lines will lead to an increase of around 25% in the number of passenger seat positions and a twofold increase in ASKs. A number of international airlines are also expanding their capacities in October 2014 - although these are usually just a few summer adaptations for the high seasons and in most cases do not constitute completely new-flying.
The Myanmar aviation industry is suffering from increasing pain. Since MAI has older Airbus aircraft of the Airbus 320 series, there is usually no reach to fly non-stop from Korea or Japan to Myanmar without load limitations. The Yangon - East flight can be operated non-stop as they are about one hours short due to tail wind.
While ANA has flights to Osaka, several airlines in Asia provide equal or cheaper flights on the Osaka-Yangon busts. It may be difficult for MAI to enter the Japan based business because it is an unfamiliar name. The Osaka-Mandalay network also includes some one-stop services offered by a number of Asia-based airlines.
The majority of international airlines in Myanmar, ANA included, serve only Yangon, but there are common links between Mandalay and Yangon on all Myanmar's national airlines. At the end of 2012 Korea Air (KAL) and Asiana started their operations to Yangon. While KAL currently provides one scheduled service per day (A330 in the Nordic winters and 737-800 in summer), Asiana currently only provides two weekly departures (767 all year round).
The MAI will have a 27% stake in the Yangon to Seoul production base during the wintry period, while KAL will have a 56% stake (once the plane returns to the A330) and Asiana will have the remainder of 17%. May has code-sharing with both Asiana and KAL, which has given it a certain presence in the Korea region.
Competition with both airlines will be difficult as the Myanmar Korea air transport markets are almost entirely made up of entry passengers. This stop in Phnom Penh in Seoul-Yangon gives Korea's tourist agencies the chance to connect Myanmar and Cambodia. This stop could be considered an unpleasantness, as KAL and Asiana Yangon operate non-stop in both direction.
Since MAI is not a national airline, Asiana and KAL could cooperate better with another airline from Myanmar that does not operate in Seoul-Yangon and would be able to provide local food. As the new lines to Japan and Korea will pose a challenge, MAI must extend its networks or run the danger of them being completely displaced.
The MAI cannot allow itself to reduce its proportion of global transport significantly below the 12% level of 2013. The company must grow in order to retain its importance and gain a reasonable proportion of its domestic markets. It is now the right moment to take a step as other Myanmar airlines are in the process of setting up their own globalisation.
MAI could quickly cease to be Burma's biggest global airline if it does not return to growth. In general, overseas airlines are better placed to operate most of Myanmar's global airlines. In the long term, it could be better if MAI is only aiming for moderate global growth and enters into more partnership with overseas airlines to reach other countries.
Since it was founded in 2011, a strong partnership or even fusion with Air KBZ, which has quickly developed into one of the biggest airline companies in Myanmar's home country, would also improve MAI's standing by offering its services to internal and external alliances. The MAI is facing a tough struggle as it seeks to regain shares of the markets that have been taken back by overseas companies that have been expanding on Myanmar's air transport markets since 2011, and as it is increasingly competing with a number of Chinese companies.
Losses in Myanmar's crowded air traffic will be inevitable. It is MAI's job to find the right new ways and partner.