Myanmar

Myanmar’s first LCC Golden Myanmar prepares to enter international market

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.

Nok Air prepares for IPO in 3Q2013 with international expansion, starting with two Myanmar routes

Thailand’s Nok Air plans to pursue fleet and network expansion as it seeks to raise about USD100 million through an initial public offering (IPO). The planned 3Q2013 IPO is one of several milestones for Nok in 2013 as the low-cost carrier resumes international services, initially with flights to Yangon and Mawlamyine in Myanmar. Nok will also take delivery of additional 737-800s, completing in 2013 the phase-out of its 737-400 fleet, which it has been operating since launching services in 2004.

Nok, which is partially owned by Thai Airways, has traditionally been a relatively conservative and low profile carrier. It has not been shy to contract during challenging periods and has never been concerned about establishing an international profile, instead focusing on building a strong local brand in the Thai market. But Nok’s steady profitability and strong position in a growth market should allow for a successful IPO and could eventually lead to significant international expansion.

Myanmar poised for more rapid growth in 2013 as foreign carriers expand and local LCC launches

Another year of rapid growth is expected in the Myanmar market as international and domestic carriers continue to expand in response to growing business and leisure demand. Myanmar’s international market has already recorded a 64% capacity increase in the nine months since Aung San Suu Kyi’s National League for Democracy won landmark elections in Apr-2012, leading to the rapid opening up of the Southeast Asian country and the lifting of economic sanctions.

Eight foreign carriers have since launched services to Myanmar while several carriers which already served the country added capacity. Following the 09-Jan-2013 addition of Dragonair, Myanmar is now served by 21 foreign carriers which account for about 80% of total capacity to and from the country.  

International carriers will continue to expand their operations to Myanmar in 2013 although at a more modest level as it will take time for the capacity added in 2H2012 to be absorbed, particularly given the shortage of hotel rooms and other infrastructure constraints. However, 2013 could see more rapid domestic growth as the country’s six existing domestic full-service carriers look to profit from growing demand for travel within the country and Myanmar’s first low-cost carrier, Golden Myanmar Airlines, enters the market.

Southeast Asia poised for another year of growth in 2013

2012 was a dynamic year for Southeast Asia’s aviation market with more rapid growth, driven by low-cost carriers and the launch of five new airlines. The rapid pace of start-up activity will likely not be repeated in 2013 and some of the region’s LCC markets are approaching maturity. But the continued strength of the economies in ASEAN, led by booming Indonesia, and the continued rapid rise of the region’s middle class should ensure another big year of traffic growth for Southeast Asian carriers – particularly LCCs and, to a lesser extent, full-service carriers.

Low-cost carriers now account for over 50% of total seat capacity within Southeast Asia. Three of the five new jet operators in Southeast Asia which launched in 2012 are low-cost carriers – AirAsia Philippines, Singapore’s Scoot and Indonesia’s Mandala (the latter had been a full-service carrier prior to suspending operations 15 months earlier). The other two new carriers in Southeast Asia follow hybrid models – Thai Smile and Lao Central Airlines. VietJet would be a fourth new LCC for Southeast Asia had it not launched services at the tail end (Christmas Day) of 2011.

Myanmar set to become Asia’s next big aviation growth market

Myanmar’s aviation market is poised to enter a major period of growth as the country begins to open up following landmark elections earlier this month that were won by Aung San Suu Kyi’s National League for Democracy. The election was seen as a turning point for Myanmar, formerly known as Burma, and the start of a more favourable business environment, including for aviation. Several Asian carriers and airport operators have identified near-term opportunities in Myanmar. The opportunities for all types of carriers – local and foreign, domestic and international, low-cost and full service – face no limitations in the medium term as the Myanmar market is now the most underserved market in ASEAN and perhaps all of Asia.

Myanmar’s two existing international airports, at Rangoon and Mandalay, are to be partially privatised while a recently opened new airport at the new capital of Naypyitaw will soon start to handle international flights. There are also plans for upgrading several domestic airports, many of which lack basic infrastructure.