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Myanmar's airlines are under domestic and international pressures
Underfunded and often non-profitable, Myanmar's airlines are struggling to survive as domestic and international competitors heat up. Myanmar enjoys rapid economical expansion, low oil costs and an increasing number of international visitors.
However, on the whole, airlines are not profitable," said U Sai Kham Park Hpa, who was CEO of Air Mandalay until last year. A topic is the contest. There are 11 airlines flying to the same destination - the Yangon, Mandalay and Nay Pyi Taw trios and some other touristic places like Bagan and Heho.
They do not differ much in the way they serve these lines. "Commercial seems that all airlines have the same plan in flight schedules, tariffs and tariff conditions," said Chris Mosebach, Executive Vice President of the Myanmar Aviation Centre. The airlines also have the same idea of moving from one place to another over several stations, rather than point-to-point, which reduces the turnover per passenger slot, he added.
Air Mandalay CEO Selva Kumar, who came back last year after three years with Apex Airlines, acknowledges that competing is a challenge. Kumar hopes that Air Mandalay can conquer a somewhat different kind of air transport by focusing on long-haul point-to-point services on selected targets with its two Embraer 145s.
He added that Air Mandalay will need five aircraft to become viable. The majority of Myanmar's local airlines use turboprop aircraft that are more slow and propellant effective on short trips. However, even in a recess, airlines face financing problems. The majority are founded by one of two shareholders, and without a sophisticated bank system or equity markets, the Myanmar entities are almost entirely dependent on their shareholders for further financing.
After it was difficult to find replacements for airplanes that were too old to be flown, Air Mandalay ceased to operate in December 2014. A number of aviation industries have found that airlines are often founded by investment for reasons of reputation, not a passionate desire, without considering the return on investment of the investment strategies. Myanmar National Airlines, which initiated a corporatization lawsuit in 2014, is an air carrier with fewer financing problems.
The forwarder is hoping to be a joint-stock corporation in two or three years' timeframe, but is currently receiving a grant from the federal administration and is in a reprieve before starting to repay interest, his chief executive officer Captain Than Tun TIM. The MNA will fly to Singapore, Hong Kong and Bangkok and will use its new planes for flights to China.
It has already reserved airlines' slot services to Shanghai and Chengdu. Myanmar's only other global airlines - Myanmar Airways ltd - the revival of MNA is contributing to overseas airlines' competitive environment, said Daw Aye Mra Tha, the airline's Director of M&P. In the past year, the Thai Nok Air became a member of the local low-cost airlines flying to Myanmar, she added.
Thailand Voyager and Air Asia already operate a Bangkok-Yangon service, and Air Asia also operate a Kuala Lumpur-Yangon service, as does the low-cost JetStar. However, the company cannot restrict its service, which is also offered by other Myanmar airlines, although it still has to face competition from local airlines. It is also considering new flights from Mandalay to Bangkok and Yangon to Penang.
National airlines are also competing with MNA. Though the airline has been operating again since 2015, the predominant part of its services are in Germany. His most common round-trip trip is a day trip from Yangon to Bangkok. The MNA will operate 38 services to Bangkok this months, but 1471 services within Myanmar in the same months, according to aviation comment.
"The MNA should be the nationally owned airlines - it is a matter of course and we have to embrace it," said a Myanmar officer in charge of a Myanmar based company, who asked to stay anonimous. Myanmar should benefit from more airlines at home and abroad offering to Myanmar on cross-border services. Emirates recently announces that it will operate services from Dubai to Yangon and on to Hanoi.
As part of the fifth civil liberties of the airlines, which allow an air carrier to operate between two different destinations for as long as the journey begins or ends in its home town. If major airlines like UAE make use of the fifth liberty right, this means more competitiveness on cross-border flights.
However, taking more people to Myanmar via Yangon also contributes to increased trade by domestic airlines, Mr Kumar said. ASEAN Open Skies Policy, which Myanmar has signed, is a major menace to domestic airlines. The same fifth freedoms that were used by the Bangkok Airways and Air Asia airlines to operate services from their home destinations to Nay Pyi Taw and Mandalay will be granted.
Only three Myanmar airfields - Yangon, Mandalay and Nay Pi Taw - can accommodate the major international airlines' jet flights, Mr Mosebach said. However, when other airfields are rearmed, even local low-cost airlines can achieve these goals. These are part of a bigger spending, said airline industries wells.
Refugees from across the aviation sector complained that the Myanmar airlines' fiscal burdens are higher than in other jurisdictions, even though they are being asked more and more to face competition from more entrenched competitors in these states.