Myanmar's aviation sector booming

Myanmar's aviation sector booming

KONEMOE, Myanmar - Htay Aung was riding pillion on a motorbike last Christmas morning, wending through the cool hills of eastern Myanmar, when Air Bagan Flight 11 came down on top of him.

The Fokker 100 - more than 24 tonnes of aircraft, plus 65 passengers and six crew - sheared its way through trees and powerlines, across the road and into a field short of nearby Heho airport. Htay Aung found himself sucked into a scorching maelstrom of debris.

"I felt my body go up into the air and then drop. Fire was all around me," recalled Htay Aung, who is now 19 and lives with the effects of burns across his head and body. His uncle, who was driving that day, was killed.

The crash, which also gutted the jet, killed one passenger and injured eight, most of them foreign tourists, capped off a horror year for air safety in Myanmar. Out of the country's tiny fleet of domestic commercial aircraft, four were involved in serious accidents last year, one of them causing death.

But the appalling safety rate has hardly dented a broader trend in Myanmar's aviation industry: spectacular growth. After decades under the thumb of xenophobic generals, one of Asia's last frontiers of commercial aviation is opening up.

Passenger numbers are surging as new airlines spring up and foreign carriers rush in. Some officials and executives talk grandly of turning Myanmar into a regional hub.

The country, however, appears ill-prepared for the pace of change, putting both safety - and the prospects of many hopeful airlines - at risk.

"They've opened up, in my personal opinion, far before they're ready for it," said Shukor Yusof, an analyst who specialises in the aviation sector for credit-ratings agency Standard & Poor's in Singapore.

"The infrastructure is not there to cope with demand. There's going to be a point where it's going to get choked up," he said, adding that safety is "not going to improve any time soon."

In the 2011/12 peak winter season for foreign tourists, who are driving much of the growth, there were 50,000 seats per week in and out of Myanmar provided by 13 international airlines, including flag carrier Myanmar Airways International (MAI), according the Capa Centre for Aviation, which advises airlines, and flight industry database Innovata.

Last year, that jumped to 80,000 seats, with Capa predicting it will surpass 100,000 this winter. The number of international airlines in the country nearly doubled to 23 as at early this month, with MAI and Golden Myanmar the only locals.

There are signs too many airlines are entering at once, meaning the number could shrink in coming years as some carriers merge or die off, said Brendan Sobie, chief analyst at Capa.

Win Swe Tun, deputy director of Myanmar's Department of Civil Aviation (DCA), is shockingly candid about Myanmar's air accident rate. "It's nine times higher" than the global average, he said.

In the 1950s, Yangon, then known as Rangoon, was South-east Asia's aviation hub. But after the military seized power in 1962, civilian aviation entered a long decline.

International isolation made it hard to deal directly with manufacturers, import equipment, train staff or finance infrastructure. Some of those problems were lifted with the end of European Union sanctions this year. The US has suspended sanctions, but not ended them entirely.

State-run Myanma Airways, a domestic airline that partly owns international flag carrier MAI, grounded its three Chinese-made Xian MA60s last year after two of the turboprop aircraft suffered accidents on landing within a month, said Win Swe Tun.

The purchase of the aircraft in 2010 was a direct result of sanctions, he added.

Locally owned airlines began to emerge before the advent of a quasi-civilian government in 2011. Many, like Myanma Airways, are losing money. Seven carriers, six of them private, are operating regular flights. Four more domestic airlines are planned.

International airlines are jostling to get in.

VietJet Aviation Joint Stock Co, Vietnam's only privately owned airline, is in talks with an unidentified local carrier. Thai AirAsia has entered into joint venture talks with "some potential partners", said Tassapon Bijleveld, chief executive of the unit of Malaysia's AirAsia Bhd.

Japan's ANA Holdings Inc (ANA) announced in August it was buying 49 per cent - the maximum under Myanmar law - of tiny domestic carrier Asian Wings. The new deal will add international routes and expand its fleet with jets and turboprop.

As Myanmar's skies get busier, so are its antiquated and under-funded airports. Only three of Myanmar's 33 airports - Yangon, Mandalay and Naypyitaw - are international. Others often lack bigger runways, advanced navigation and safety equipment and adequate security.

Yangon airport, the country's busiest, is already over its annual capacity of 2.7 million passengers, accepting 3.1 million last year.

A US$150 million upgrade to Yangon airport was recently awarded to a consortium led by an affiliate of Asia World, a conglomerate run by Tun Myint Naing, also known as Steven Law, the US-sanctioned son of the late drug kingpin-turned-tycoon Lo Hsing Han. A Japanese consortium has been charged with revamping Mandalay's airport, seen as a future logistics hub.

The big project, however, is a plan to build a new US$1.5 billion airport for Yangon at Hanthawaddy, north-east of the city, a job given to a consortium headed by South Korea's state-run Incheon International Airport Corp.

The new airport will be designed to handle 12 million passengers a year on its opening in 2018, and will eventually become a regional hub in its own right, handling 30 million passengers annually by 2030, Win Swe Tun said. That compares with 48 million passengers at Bangkok's Suvarnabhumi Airport and 51 million at Singapore's Changi Airport.

Heho Airport, where Air Bagan crashed last December, shows just how far Myanmar has to go.

As airlines queue up to enter the country, the biggest international carrier flying to Myanmar, Thai Airways, sounded a note of caution. Infrastructure constraints mean there is "not now" any money to be made on domestic routes, executive vice-president Chokchai Panyayong told Reuters.

"I think in a couple of years we'll move in," he said.

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