Golden Myanmar Airlines
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Golden Myanmar Airlines, a Myanmar based LCC, became the eighth airline in the country when it launched services in Jan-2013. As the first carrier in Myanmar to follow the LCC model, Golden Myanmar is trying to differentiate itself from its competitors in the highly fragmented market, operating domestic and international services from its main hub at Mandalay International Airport and its secondary hub at Yangon International Airport. The carrier plans to expand its fleet with a new aircraft every six months with the aim of operating services to the Middle East, Europe, Australia and the US over the next few years.
Location of Golden Myanmar Airlines main hub (Mandalay Annisaton Airport)
LCCs will continue to evolve into hybrids of the original core model. CAPA and OAG consider Golden Myanmar Airlines fits the LCC profile and it is included in our reporting on this basis. Please note: when reporting for an airline is changed from or to LCC the historical data is not affected and it can lead to a distortion in the current reported data. Contact us if you have any queries.
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Myanmar’s aviation market has huge potential for both local and foreign carriers as the country has recorded some of the highest passenger growth rates in Asia since opening up in 2012. But there are also huge challenges, including infrastructure constraints, over-capacity and unprofitability.
Myanmar currently has eight carriers with at least another four preparing to launch services. Most of these carriers focus on the domestic market, operating similar routes with similar aircraft, a similar product and a similar business model. It is too many carriers given Myanmar’s domestic market consists of less than four million annual passengers. Consolidation is inevitable.
Burmese carriers are also now struggling to compete in Myanmar’s international market as foreign airlines have nearly tripled capacity since the market opened up. Burmese carriers transported less than 300,000 international passengers in the first three quarters of 2013, accounting for less than 16% of the total market.
SIA, Jetstar & Tigerair drive Myanmar-Singapore growth but visa restrictions remain major impediment
The Myanmar-Singapore market is facing potential over-capacity as more flights are added, led by low-cost carriers. Tigerair launched services to Yangon in Oct-2013 while Jetstar Asia and Golden Myanmar have both unveiled plans to add capacity on the Yangon-Singapore route.
Passenger numbers between Myanmar and Singapore have increased by about 50% over the last two years. But capacity levels are now up nearly 100%.
Without a waiver of current visa restrictions it is unlikely the market will be able to absorb the additional capacity. Singapore has not approved a proposal from Myanmar to lift visa restrictions although Myanmar is the only Southeast Asian country for which Singapore requires visas. A visa free environment is particularly important for the LCCs, which are eager to stimulate demand on the Yangon-Singapore route.
The Myanmar-Thailand market is experiencing another surge of additional capacity as airlines from both countries continue introducing new flights. There will soon be about 23 daily frequencies between the two countries, up from 14 only a couple of months ago and eight from mid-2012.
So far the demand has not kept up with supply, resulting in unsustainably low load factors. The intense competition also has led to a reduction in yields.
But the market could get a reprieve as Myanmar and Thailand prepare to lift visa requirements. By the end of 2013 Thailand is expected to become one of the first visa-free countries for Myanmar. This should unleash a new wave of passenger growth although for at least the short term the market seems set to continue to suffer from over-capacity.
Golden Myanmar Airlines is preparing for a major expansion phase as the low-cost start-up carrier adds over the next five months a second A320 and two ATR 72-600s.
The additional capacity will be primarily used to expand Golden Myanmar’s domestic network, which currently consists of just one route. The carrier will also add capacity on its only two international routes, Yangon to Bangkok and Singapore, but has decided against launching new scheduled international services in this phase of its development.
As Myanmar’s first LCC, Golden Myanmar is well positioned to take advantage of the huge opportunities in its local market. But there are also challenges as intense competition in the Myanmar market has resulted in over-capacity in most domestic and international routes.
Japan’s All Nippon Airways (ANA) will gain a strategic foothold in Myanmar, one of Asia’s most dynamic and fastest growing markets, following an unusual move to acquire a 49% stake in Asian Wings Airways (AWA). Asian Wings is a small little known domestic carrier, but with financial and management support from ANA could quickly become Myanmar’s largest international airline.
The ANA-AWA surprising partnership is significant as it marks ANA’s first investment in a carrier outside Japan and marks the first overseas investment in any Myanmar carrier. In both cases it will likely not be the only example for long.
ANA is looking to acquire stakes in several Asian carriers as part of its new strategy aimed at diversifying the group’s portfolio. Meanwhile, other Myanmar carriers are looking to secure potential investment from foreign airline groups, including LCC groups. Several Southeast Asian LCCs have been looking at establishing a joint venture or affiliate in Myanmar while the country’s other full-service carriers could also attract interest.
Golden Myanmar Airlines is planning to launch services to Singapore on 5-Apr-2013, the first phase of the start-up carrier’s plan to build an extensive international network. The expansion at Myanmar’s first home-grown LCC will further drive up growth in Myanmar’s dynamic international market, which has seen a 67% increase in seat capacity over the last year.
Myanmar recorded 33% growth in international passenger traffic in 2012 and 16% growth in domestic passenger traffic. Even faster international growth is expected in 2013 as several new foreign carriers entered the market in 2H2012 and as a number of new routes are added this year from Myanmar’s two international airports, Yangon and Mandalay.
Local carriers also are responding to the favourable market conditions by growing domestically and internationally. Myanmar’s LCC penetration rate, which is the lowest among the largest seven Southeast Asian countries, will continue to rise in 2013 as Golden Myanmar and foreign LCCs expand.
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