Myanmar’s economic downturn hits aviation sector

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Three airlines in Myanmar suspended operations in the recent past, citing economic losses and a shortage of aircraft. Two of them, Yangon-based Air Bagan and Naypyidaw-based Apex Airlines, have already returned their air operator certificates, while another one, FMI Air, also with its hub in Yangon, on July 20 announced temporary suspension of both its scheduled and chartered flight services to pave way for reorganisation after only one year in business.

There are also rumours that a fourth airline, Asian Wings Airways, might turn its fleet into the hangar, but so far it is still flying.

Officials say that local airlines in Myanmar have been hurt by a downturn in the overall economy, as well as by a slowdown in the tourism industry.

“If tourist numbers decrease, it affects the domestic airline industry because most local people do not travel by air,” U Win Khant, permanent secretary of Myanmar’s Ministry of Transport and Communications, noted, adding that the conflict in Rakhine state had also led some tourists to believe that travel to Myanmar was unsafe, which has impacted related industries.

But there is also political dissent in the country whose economy is in the hands of a few big businessmen and their cronies in the government and military. Reportedly, FMI Air was in talks with AirAsia Group to set up a new low-cost carrier in Myanmar, but the deal fell through due to opposition from Myanmar’s Department of Civil Aviation.

The suspension of the three airlines brings the number of airlines still operating in the country to nine, which experts say is still a lot for a market of an estimated two million passengers.

The closure of some of Myanmar’s domestic airlines has been anticipated for some time. Back in 2016, aviation industry consultancy CAPA-Center for Aviation said it was “staggering” that there were that many domestic carriers in Myanmar.

While CAPA conceded earlier this year that the Myanmar market had “huge potential,” it also came to the conclusion that the airline industry in the country “continues to suffer from overcapacity and a lack of profitability,” and that consolidation “seems inevitable”.

Furthermore, expensive fuel has kept ticket prices high, while a lack of passengers, particularly during the monsoon season, has made many routes unprofitable.

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Reading Time: 2 minutes

Three airlines in Myanmar suspended operations in the recent past, citing economic losses and a shortage of aircraft. Two of them, Yangon-based Air Bagan and Naypyidaw-based Apex Airlines, have already returned their air operator certificates, while another one, FMI Air, also with its hub in Yangon, on July 20 announced temporary suspension of both its scheduled and chartered flight services to pave way for reorganisation after only one year in business.

Reading Time: 2 minutes

Three airlines in Myanmar suspended operations in the recent past, citing economic losses and a shortage of aircraft. Two of them, Yangon-based Air Bagan and Naypyidaw-based Apex Airlines, have already returned their air operator certificates, while another one, FMI Air, also with its hub in Yangon, on July 20 announced temporary suspension of both its scheduled and chartered flight services to pave way for reorganisation after only one year in business.

There are also rumours that a fourth airline, Asian Wings Airways, might turn its fleet into the hangar, but so far it is still flying.

Officials say that local airlines in Myanmar have been hurt by a downturn in the overall economy, as well as by a slowdown in the tourism industry.

“If tourist numbers decrease, it affects the domestic airline industry because most local people do not travel by air,” U Win Khant, permanent secretary of Myanmar’s Ministry of Transport and Communications, noted, adding that the conflict in Rakhine state had also led some tourists to believe that travel to Myanmar was unsafe, which has impacted related industries.

But there is also political dissent in the country whose economy is in the hands of a few big businessmen and their cronies in the government and military. Reportedly, FMI Air was in talks with AirAsia Group to set up a new low-cost carrier in Myanmar, but the deal fell through due to opposition from Myanmar’s Department of Civil Aviation.

The suspension of the three airlines brings the number of airlines still operating in the country to nine, which experts say is still a lot for a market of an estimated two million passengers.

The closure of some of Myanmar’s domestic airlines has been anticipated for some time. Back in 2016, aviation industry consultancy CAPA-Center for Aviation said it was “staggering” that there were that many domestic carriers in Myanmar.

While CAPA conceded earlier this year that the Myanmar market had “huge potential,” it also came to the conclusion that the airline industry in the country “continues to suffer from overcapacity and a lack of profitability,” and that consolidation “seems inevitable”.

Furthermore, expensive fuel has kept ticket prices high, while a lack of passengers, particularly during the monsoon season, has made many routes unprofitable.

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