Air Mandalay ceased operations:Why Myanmar domestic Airlines decrease gradually?

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A bad news for Myanmar tourism development and domestic Airlines! Air Mandalay,the first domestic and regional joint venture airline in Myanmar,ceased operations in September 4,2018.I think it’s the bad news amid the government of Myamar is reinforcing to develop the tourism sector. Airlines are particularly important for Myanmar because it is not a country with a well-developed rail system like a developed one.Travelling by train to Mandalay or other regions is not an option for most tourists and investors.To develop the tourism sector in the country,the cheapest airlines like regional flights and more local airports are essential.The government should incentivize airlines to expand their routes to otherwise commercially unsustainable destinations in order to boost tourism and businesses, but the ultimate goal should be for private players to flourish on their own.

24 years old Air Mandalay

Air Mandalay was established on 6 October 1994 and started operations on 18 October that year with a flight from Yangon to Mandalay. Now it has been in serve for 24 years.It has a long history of supporting the country’s tourism industry. It was established as a joint venture between Air Mandalay Holdings Singapore under Managing Director Michael Chang (51%) and Myanmar Airways. On 27 August 1995, Air Mandalay started its first international service from Yangon to Chiang Mai in northen Thailand.Before it shut down, Air Mandalay’s routes covered Yangon, Myitkyina in Kachin, Sittwe in Rakhine and Tachileik in Shan in local.

Intense competitions

You would think about why the business running for 24 years ceased it’s operations and what the causes of it was.According to The Myanmar Times’s report,the company stated in a press release that it has been extremely difficult to operate and the situation has worsened since 2011. U Thein Sein’s administration since 2011 allowed a maximum of 10 airline operators licenses. When the licenses were approved to operate in the country,resulting in too many domestic carriers, oversupply of seats and intense competition.But the market size is still small.Then airlines suffered from heavy losses.On top of the high fuel price and lack of profitability for the sector, overcharging poses another problem.Domestic Flights, which charge foreigners more, end up more costly than regional flights. This has severely hampered the market demand.

The fourth Airline suspended

Air Mandalay was not the first one that decided to stop operations.It was the fourth domestic airline of Myanmar aviation businesses  suspended after Air Bagan,Apex airline and FMI Air.The Airline struggled to turn a profit in an industry overcrowded with competitors, amid high fuel price, lacklustre demand and lack of government support.FMI Air also stoped operations on July 20 after more than five years.There was a total of 10 domestic airlines running with about 40 aircrafts in the country.

Myanmar tourism 2020

Myanmar tourism master plan was projected that it would attract 7.5 million visitors by 2020. But given the recent growth rates,the country will not even reach 2 million visitors in 2020. Most of Myanmar officials point out the reason to Rakhine issue.Despite rapid growth in passenger traffic over the last six years, Myanmar has fallen short of expectations in local aviation business. While the nearest Thailand is a top ten country to visit in the world,we are struggling to attract more visitors.In addition,the four domestic Airlines,serving for the country’s visitors,have been wiped out by intense competitions.So how about 2020 toursm? Is the condition beyond hope of growing the aviation and tourism business in our country?

 

 

 

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