Myanmar Airways is the state-owned and operated flag carrier of the Republic of Myanmar (Burma) and operates scheduled services to all major domestic destinations while its international arm, Myanmar Airways International operates flights to destinations in South-East Asia from its hub and base at Yangon International Airport. Although other airlines in Myanmar are listed as private it is common that these will have some links to government, evidenced by significant licensing and administration fees levied by the state.
The Department of Civil Aviation is the authority responsible for the overall administration of civil aviation services in Myanmar and also provides air navigation services.
Airports in Myanmar
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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.
Asian carriers continue to pour additional capacity into Myanmar, building on increases which were initially pursued in 2H2012 after the market quickly opened as economic sanctions which had been in place for two decades were lifted. The Myanmar international market will exceed 110,000 weekly international seats in Jan-2014, representing an increase of about 40% compared to Jan-2012 and almost 130% compared to Apr-2012, when Aung San Suu Kyi’s National League for Democracy won landmark elections.
But so far the additional capacity has outstripped demand. International passenger traffic in Myanmar has grown by about 70% over the past two years – an impressive figure but not sufficient to keep up with the capacity increases. As a result load factors to and from Myanmar are significantly below the global average.
Nearly all of the 14 foreign carriers which were already serving Myanmar before Apr-2012 have seen load factors on their Myanmar routes drop over the last year. The nine foreign carriers which have launched and retained services to Myanmar since the market opened have also so far recorded lower than normal load factors – generally in the 50% to 70% range.
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.
Southeast Asia airline market sees more rapid growth & high international low-cost penetration rates
Southeast Asia continues to post some of the highest growth rates in the global aviation industry, driven primarily by expansion in the region’s booming low-cost sector.
LCCs now account for over 50% of capacity in Southeast Asia’s four largest domestic markets – Indonesia, Malaysia, the Philippines and Thailand. Even more impressively, LCCs have been able to rapidly claim about a 50% share in the intra-Southeast Asia international market.
But there has also been growth in 2013 at nearly all of the region’s flag carriers. A large portion of this growth has been on regional routes as full-service operators have been able to join the LCCs in taking advantage of the generally favourable economic conditions in Southeast Asia.