‘If We’re Going to Compete, We Need the Support of Our Regulator’
By Kyaw Hsu Mon 7 April 2015
With the gradual introduction of the Asean open skies agreement, which will over time open domestic airlines to regional competition, local carriers are facing increasing competition and regulatory pressure. One temporary casualty of the rapidly evolving aviation market was the joint venture airline Air Mandalay, which suspended its chartered flight services in December last year due to unmet upgrade requirements and delays in receiving new aircraft from overseas suppliers. After reintroducing chartered flights in March, and with plans to resume scheduled flights after a nine-month hiatus at the beginning of May, Air Mandalay CEO Sai Kham Park Pha spoke with The Irrawaddy about the challenges facing the airline industry in Burma.
What is the current state of Air Mandalay’s operations?
We suspended our domestic flight schedule in August last year and resumed charter flights in March this year. We’re running charter flights to almost all tourist destinations here, including Mandalay, Bagan, Thandwe and Myitkyina. Our scheduled flights will resume on May 1.
Why were flights suspended?
It has taken time to import new aircraft. Two new aircraft that are coming now were supposed to arrive last year, but they were delayed. That’s why we suspended all flights.
What major challenges are domestic airlines facing at the moment?
The major factors are competition, human resources and financial support. We have to wait two years to get new pilots, and then it’s another six or seven years before they are fully professional. Then we have to train other employees for commercial operations, like ticketing and marketing. Capital injections are not that much of a concern, as we have had many investors even during the grounding. Competition is increasing as the Asean open skies policy is beginning here. Many domestic operators opposed this policy, but I agree with what the government is doing. We have been an underdeveloped industry, so we need to go into the real world to compete or we will stay like this. If we’re going to compete, we require the support of our regulator [the Ministry of Transport] and other airline associations. It will be easy to compete with other regional operators if we start now.
Do you think that other regional competitors might monopolize the domestic industry when the open skies policy is fully introduced?
There will be many limitations placed on domestic airlines to comply with open skies regulations. For example, the regulator can limit the exact investment ratio and access to airports. We know that we have to open proper international airports at Naypyidaw, Rangoon and Mandalay. But I think the government will not open space for regional competitors at crowded domestic airports like Nyaung-U, Heho and Thandwe. Other ways to protect local carriers should also be considered by the government.
Which regional budget carriers would be your major competitors?
All would be competitors, small or big. How to compete would be a different story. I mean how they will differentiate themselves, as a budget carrier, legacy airline or hybrid, depending on their target market.
What do you think the government needs to do to support the local aviation industry?
To say would be like drafting a shopping list, there are many things needed. I realise the government can’t do many things at the same time, not only in the case of airlines but other industries as well. Things will gradually develop, what we need is to survive during this transition period.