Myanmar's Domestic Airlines Face Competition From Regional Carriers Under ASEAN Integration Plan

Foreign airlines are taking up more of Myanmar’s airspace theses days and domestic airlines run by well-connected friends of the forme junta are gearing up for competition from regional players in the coming years.

Eight domestic carriers operaate currently in Myanmar including Myanmar Airways International (MAI) and Myanmar Airways, MAI’s counterpart that serves exclusively domestic flights, the Irrawaddy, a Myanmar news outlet, reported on Thursday.

Ownership of these firms is concentrated in the hands of well-connected businessmen who thrived under the nation’s military junta – U Aung Ko Win, for example, who is the chairman of the Kanbawza Bank, owns MAI and Air KBZ, while KMA Group’s U Khin Maung Aye owns Golden Myanmar Airline. Yangon Air has been linked to the United Wa State Army (UWSA) and is on a U.S. Treasury Department blacklist.

But with Myanmar’s recent political reforms and new openess these companies need to prepare for competition by tuning up substandard services. Safety concerns could also steer tourists away from local carriers, as well.

Regional carriers with more extensive networks will be given a boost with the Association of Southeast Asian Nations (ASEAN) members’ plan to open up Southeast Asia’s aviation market with an “Open Skies” policy in 2015. Under the policy ASEAN member states will be obligated to open their airports to regional airlines, taking away the advantage domestic Myanmar carriers once had in the country.

In preparation for such competition, Asian Wings Airways agreed in September to sell 49 percent of its shares to All Nippon Airways (ANA), Japan’s largest airline, for $25 million.

“The thing we have to be cautious about is that international airlines could bring many passengers to all entry points [in Myanmar] in two years,” U Lwin Moe, the executive director of Asian Wings, told the Irrawaddy. “If such international airlines operate on local routes, our domestic share could fall.”

U Lwin Moe added that Open Skies is the main reason for this ANA partnership. Under the agreement, ANA will lease aircraft to Asian Wings and provide pilot training.

The competition has already started – in March Thai Airways began flights between Bangkok and Mandalay, one of Myanmar’s major cities. A month later MAI stopped serving that route. Bangkok Airways, another Thai carrier, announced in September that it will begin serving the same route, opening up a number of new ways for visitors to fly into Myanmar.

With record number of visitors pouring into Myanmar, domestic airlines are already struggling to keep up with demand, according to a manager at Columbus Travels & Tours, and they would have to change their business practices to keep up with regional airlines offering cheaper, more convenient options.

Frequent fliers in Myanmar have already seen the difference between services from domestic firms and international airlines – domestic airlines’ flights are often overpriced and buying tickets is inconvenient.

“The service is quite different. The check-in time is short [with Air Asia]. So they, local airlines, have to prepare to operate like this,” said U Zin Min Swe, a businessman based in Mandalay, adding that 24-hour booking and the option to book online, now expected of airlines, are not offered by any local carriers, the Irrawaddy reported.