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"Operating in the aviation sector in Myanmar has become increasingly difficult and after much deliberation, we have decided to temporarily suspend the operations of IMF Air," said IMF President Serge Pun. The suspension resulted in the loss of 134 jobs
Launched in 2012, Yangon-based FMI Air operates scheduled and charter flights, covering Yangon, Nay Pyi Taw, Dawei, Myeik, Kaw Thaung and Thandwe. Having sold a 40% stake in Yangon Land, a subsidiary of Serge Pun and Associates, in 2015, First Myanmar Investment Co., Ltd. holds a 10% stake in FMI Air.
Myanmar at the conclusion, after Air Bagan and Apex Airlines. To date, three out of ten national players have dropped out.
The Protectionist Curse
The company attempted to launch a low-cost airline with AirAsia based in Malaysia. Some time ago, Mr. Pun met with AirAsia CEO Tony Fernandes in Sydney to explore the possibility of a joint venture. But Fernandes said on May 15 that negotiations had been halted and AirAsia decided not to enter Myanmar "for now". If it had taken off, the new company would have operated international and domestic flights. However, the Myanmar authorities continue to block any attempts at domestic flights to protect local players.
"When we talked to AirAsia about its new airline in collaboration with FMI Air, they said they planned to do local flights well, if we allow that, our local businesses will be hit a lot." said U Ye Htut Aung, deputy director general of the Department of Civil Aviation, in an interview with The Myanmar Times. The proposal was blocked in May. This happened a few months after Japan's largest airline, ANA Holdings, abandoned its Asian Blue joint venture with Golden Sky World, owned by local conglomerate Shwe Than Lwin, after the government refused its request for air operator certificate without explanation. It was ANA's second attempt to enter the market after scrapping a JV with Asian Wings Airways in 2014.
In particular, the rejection of JVs contradicts the government's promise to open up the sector for greater foreign involvement and make aviation more competitive. improve tourism and attract foreign investment. Nay Pyi Taw has not followed up his rhetoric with actions despite the supposed opening of the aviation section for foreign investment since 2013.
In his 2016 report on Myanmar, the CAPA-Center for Aviation noted that the domestic market was crowded with "ten staggering competitors" and that APEX and IMF newcomers "have not grown up". U Ye Htut Aung once urged deficit carriers to merge and consolidate in order to remain competitive, but offered little remedy beyond this board. According to the CAPA report, despite the slowdown in domestic growth, consolidation remained "elusive".
The government plays an important role in the sector. With the exception of Myanmar National Airlines owned by the state, other domestic airlines are considered private. But it is common that "these have links with the government, as evidenced by the significant licensing and administration fees collected by the state," according to CAPA. The problem is that the remaining players are not doing well either, and most are losing, including Air KBZ.
"We made a loss of 25 to 30% last year with fewer foreign visitors to Myanmar, and this year, between January and May, we already have a loss of 30pc," said Daw Aye Mra. Tha, general manager of Myanmar Airways International and Air KBZ, adding that they were not planning to stop operations.
sector note published in March by the European Chamber of Commerce found that "expensive" domestic flights lead to the majority of foreign tourists visiting the same group of destinations in the heart of the country (Yangon, Bagan, Mandalay, Inle Lake and Kyaiktiyo), while resorts are hard to access. Given that IMF Air has covered Dawei, Myeik, Kaw Thaung and Thandwe, tourists will find it even harder to travel to these parts of the country.
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