Southeast Asian carriers are set to profit from the expected surge in leisure and business travel to Myanmar as it re-emerges from political isolation, but poor infrastructure is likely to slow development.
The former Burma, one of the most isolated countries in Asia, is being welcomed back into the international fold after two decades of sanctions, thanks to democratic reforms including the release of political prisoners by President Thein Sein.
Thai Airways, SilkAir, AirAsia, and JetStar, have flown to Myanmar’s capital Yangon for a number of years and are seen as the main beneficiaries from the political shift in the country.
“This is a huge country which will provide new growth for airlines, especially the low cost carriers,” Standard & Poor’s analyst Shukor Yusof said, adding that the yields that carriers are enjoying on Yangon routes have been good.
With its pristine beaches and unspoiled cultural sites, Myanmar is an attractive destination for travellers jaded by the rapid development seen elsewhere in Southeast Asia, and tourist numbers are already rising rapidly with potential for much more growth.
During the 2010-2011 (April-March) fiscal year, 424,000 people visited Myanmar, according to official data. That compares with 19 million tourists that its neighbour Thailand attracts each year.
Thai AirAsia, said it was looking to add new routes into the country’s inland cultural centres. AirAsia flies to Yangon from Bangkok and Kuala Lumpur.
“We are considering opening more flights and destinations in Myanmar. We’re only operating to Yangon at the moment, but we’re currently looking at Mandalay and Bagan,” Thai AirAsia CEO Tassapon Bijleveld said.
Silk Air, the regional carrier of Singapore Airlines, and JetStar, a subsidiary of Qantas Airways, said they have no current plans to add flights to Myanmar but will monitor any opportunities to expand.
John Rachmat, Singapore-based airline analyst at RBS, said the thawing diplomatic climate would not necessarily translate into new routes being opened in the short term, as airlines would want to make sure that there would be any reversal in the political stance of Myanmar.
“Opening of a new route is quite an investment for an airline and for them to do this they want to make sure that the risks are manageable,” Rachmat said.
Years of economic mismanagement by the military, coupled with US and European sanctions imposed due to the regime’s human rights abuses, have left Myanmar in poverty. A third of its estimated 60 million people live on a dollar a day.
Currently there are only three airports that can accommodate single aisle commercial aircraft such as Airbus A320s or Boeing 737s, none near the country’s nascent beach centres such as Thandwe.
Standard & Poor’s Yusof said this could provide an opportunity for Changi Airport Group, the operator of Singapore’s Changi Airport, to improve the airports in Myanmar.
Analysts said the benefit could also be extended to other supporting business such as aircraft maintenance and passenger support services.