Myanmar Air Services Grow Rapidly Despite Safety Record
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Version 0 of 1. KONEMOE, Myanmar — Htay Aung was riding on a motorbike last Christmas morning through the cool hills of eastern Myanmar, when Air Bagan Flight 11 came down on top of him. The Fokker 100 — more than 25 tons of aircraft, plus 65 passengers and six crew — sheared through trees and power lines, 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 Mr. Htay Aung, who is now 19 and lives with the effects of burns across his head and body. His uncle, who was driving the motorbike, was killed. The crash, which gutted the jet, killed one passenger and injured eight, most of them foreign tourists, capped a horrific year for air safety in Myanmar. In the country’s tiny fleet of domestic commercial aircraft, four were involved in serious accidents in 2012, 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 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 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 specializes in the aviation sector for the 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 was “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 the flag carrier Myanmar Airways International, or MAI, according to CAPA-Center for Aviation, a global aerospace consulting firm, and the flight industry database Innovata. Last year, that jumped to 80,000 seats, with CAPA predicting that it would exceed 100,000 this winter. The number of international airlines in the country nearly doubled to 23 as of early October, with MAI and Golden Myanmar the only locals. There are signs that 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, the chief analyst for Southeast Asia at CAPA. Win Swe Tun, deputy director of Myanmar’s Department of Civil Aviation, is candid about Myanmar’s air accident rate. “It’s nine times” as high as the global average, he said. In the 1950s, Yangon, then known as Rangoon, was Southeast 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 United States has suspended sanctions, but has not ended them entirely. State-run Myanma Airways, a domestic airline that partly owns the international flag carrier MAI, grounded its three Chinese-made Xian MA60s last year after two of the turboprop aircraft had accidents on landing within a month, Mr. Win Swe Tun said. 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, Vietnam’s only privately owned airline, is in talks with an unidentified local carrier. Thai AirAsia has entered joint venture talks with “some potential partners,” said Tassapon Bijleveld, chief executive of the Thai unit of AirAsia, the low-cost airline based in Malaysia. Japan’s ANA Holdings announced in August that it was buying 49 percent — the maximum allowed by Myanmar law — of the tiny domestic carrier Asian Wings. The new deal will add international routes and expand its fleet with jets and turboprops. As Myanmar’s skies get busier, so are its antiquated and underfunded airports. Only three of Myanmar’s 33 airports — Yangon, Mandalay and Naypyidaw — 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, having accepted 3.1 million last year. A $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 target of U.S. sanctions and son of the late drug kingpin-turned-tycoon Lo Hsing Han. A Japanese consortium has been hired to revamp Mandalay’s airport, seen as a future logistics hub. The big project, however, is a plan to build a new $1.5 billion airport for Yangon at Hanthawaddy, northeast of the city, a job given to a consortium headed by South Korea’s state-run Incheon International Airport. 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 annually by 2030, Mr. Win Swe Tun said. That compares with 48 million 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. Sitting inside a control tower with shoes outside the door, Win Myint directs air traffic through a set of radios atop a linoleum table. With no computerized systems, Mr. Win Myint organizes the landing schedule by scribbling on plastic slides, which are then lined up in order as new information comes over the radio. Tourist arrivals at the airport, near the scenic Inle Lake, have surged in recent years, said the manager, Htay Aung. The government promises to revamp Heho and other airports by expanding runway capacity and adding security, safety and navigation equipment. Heho’s lack of navigation equipment was probably a factor in last year’s crash. Although no final report has been issued by the aviation department, Mr. Win Swe Tun, who is head of the investigation, said Air Bagan Flight 11 had attempted to land in fog without the assistance of on-the-ground navigation equipment. Having misjudged the approach, rather than go around for a second attempt, the co-pilot tried to rush the landing, he said. The aftermath of the crash has been a headache for Air Bagan, part of the Htoo Group of companies owned by Tay Za, a businessman who remains subject to U.S. sanctions for his links to the former military junta. Many foreign survivors now complain of a drawn out and difficult compensation process. Air Bagan, one of the biggest domestic airlines, has not been profitable since the 2006-07 financial year and faces pressure both from sanctions and the growth of new players, the deputy managing director, Sao Thanda Noi, said. Sanctions, she added, impose hurdles in critical areas, including training, supplies, maintenance and financing. In the end, she said, costs are simply higher. “That’s what sanctions cost us,” she said, adding that the airline would “never compromise on safety.” One tycoon who appears to have more comfortably negotiated the era of change is Aung Ko Win, president of Myanmar’s largest private bank, Kanbawza Bank, and formerly the target of European Union sanctions. His domestic airline, Air KBZ, enjoys steadily rising revenues and is seeking to expand, said its deputy managing director, Khin Maung Myint. It controls 30 percent of the domestic market, carrying nearly 240,000 passengers in its last financial year, and plans to add “two or three” aircraft soon to a fleet of six, he said. Still, Air KBZ lost one of its ATR 72-500s in a crash in February. No one was injured. As airlines line 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, said the executive vice president, Chokchai Panyayong. “I think in a couple of years we’ll move in,” he said. |