GMA expands fleet despite rising costs, low passenger volumes

U Kyaw Nyein, chief executive officer of Golden Myanmar Airlines (GMA), has been seeing a rise in the number of Chinese passengers flying between local destinations in Myanmar this year, with the number of domestic destinations having risen to 29 from 25 in 2018. This has been able to offset the fall in the number of Western passengers and prompted the airline to expand its fleet of aircraft despite rising costs.

Last week, GMA took delivery of a new aircraft, taking its current fleet of ATR-72 plans to three. “With the additional seats, we can now fly daily compared to alternate days before. We will also extend our destinations to include more flights to Dawei and Kawthoung, which could be potential tourist attractions in the future,” U Kyaw Nyein told the Myanmar Times during an exclusive interview.

“We are now entering the high season for tourism in Myanmar and we have been seeing more passenger bookings compared to previous years. We see an improvement in terms of passenger numbers now compared to previously. We noticed that more round-trip tickets are being bought and there is some improvement in terms of foreign tourist numbers. Previously, even when flights were full, there were few round-trip ticket purchases,” he said.

But the move comes at a time when escalating fuel costs has led to a cull of domestic operators with five Myanmar airlines – Asian Wings Airways, Air Mandalay, Air Bagan, Apex and FMI Air – having folded in the past two years. Over the period, the volume of local passengers has risen from 1.8 million in 2016 to 1.9 million in 2018, according to the Yangon International Airport.

Still, GMA is among just five surviving local airlines. The largest domestically airline is state-controlled Myanmar National Airways. In April, GMA also broke the country’s jet fuel monopoly when it was given permission to operate an aviation fuel business that includes being a distributor of jet fuel.

The company was founded in 2012 by a group of investors, including U Khin Maung Aye, chair of CB Bank and U Thein Tun, chair of Myanma Golden Star and owner of Myanmar Consolidated Media, which publishes The Myanmar Times. GMA currently flies to 10 locations around the country: Yangon, Mandalay, Myitkyina, Puta-O, Nyaung-U, Heho, Sittwe, Thandwe, Tachileik and Lashio.

During our interview, U Kyaw Nyein shared his views on the current state of the local aviation market and outlook for tourism:

What are the most popular local routes in Myanmar?

Passengers are mostly interested in Mandalay, Nyaung-U and Heho, with as many as 80pc to 90pc being tourists during the high season. The most revenue comes from the routes where tourists frequent and because we charge foreign tourists in US dollars, we also earn more. However, tourist numbers are not there yet for destinations such as Kawthoung, Myeik, Puta-O and Myitkyina.

Will there be any routes establi-shed to regional destinations outside Myanmar or will the airline have a code-sharing arrangement with other airlines?

We used to have flights to Singapore, Bangkok and Chiang Mai but due to the low numbers of passengers, we canceled these routes. We don’t have any plans so far and have not approached others to established code-sharing routes but if there is a market, we can consider.

What are the main issues facing domestic airline operators?

Unsustainable costs are the main issue plaguing airlines and this problem still persists. It is the main reason for why many have ceased operations. While the situation is better now, it really depends on foreign tourist numbers, so the more foreign tourists, the better.

We also have to ensure that our airline services are safe and secure, which is the main platform for competing. We are improving ourselves.

Have there been any noticeable changes to the market with the fewer number of domestic operators?

We are not seeing much changes since the airlines that went bust were the ones operating just a small fleet and the existing ones have since added one or two more planes to their fleet. On a net basis, it is still the same number of planes flying.

We still see flights that are half-full and it is rare for tickets to be sold out. We need to develop tourism better in order to see more passengers on our routes. We’re still unprofitable because there are still many empty seats.

The domestic passenger market is limited, so it is really crucial to develop tourism as foreign tourists are the main source of revenue.

How does cost factor into sustainability of the business?

The airline industry is not cost-effective when we calculate costs based on the average numbers of passengers and we can’t even cover the cost for an hour of operations even if, for example, we have a full flight of 70 passengers.

We’ve a two-tier pricing system for tickets, with foreigners paying more than locals. We also sell tickets to foreigners in US dollars, which is the currency we use to buy aircraft, equipment and machinery. Therefore, we can only make money through foreigners.

We can’t have the same pricing structure for foreigners and locals as foreign tourists during the high season make the difference for us. Western tourists in particular are less price-sensitive.

Will tourism improve and customers increase if fares are fixed?

That is impossible. Currently, in Myanmar, visitors come only during high season. During the monsoon season, locals are afraid and reluctant to fly and some won’t do so even if we gave them free tickets. Tourism depends on the traveler’s mood. It doesn’t depend on the price. For example, most Western tourists don’t consider the price when they travel. What is important is to create more tourist destinations. If tourism is good, airlines like ours enjoy better prospects.

Source: Myanmar Times

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