Myanmar opens its doors

Myanmar is proving to be Asia’s hottest destination, and a raft of new airport and tourism developments are planned, writes Simon Lewis.

Asia’s latest frontier market is opening up to private involvement in operating and building airports, and airlines are already recognising the huge potential for growth. 

In the past two years, Myanmar has begun moving from a hermitic military dictatorship towards what might become a modern democratic nation. As well as tourists wanting to visit the latest destination on the travel map, business travellers are also on the up, with companies seeking to capitalise early on what is seen as a country ripe for investment.

Growing visitor numbers, owing to some relaxation of visa rules, mean however that visitor numbers are outstripping infrastructure development and the pace at which new hotel and guesthouse capacity can be constructed.

With no overland route into Myanmar, and given the large distances between the major cities and attractions, the airports of this burgeoning destination are set to blossom in coming years. 

Airport concessions

The former British colony also known as Burma, and populated by an estimated 60 million people, has some 32 functioning airports. These include three international airports in the commercial capital Yangon, the former colonial centre of Mandalay and the newly established capital of Nay Pyi Taw, built in the latter stages of junta rule to house the seats of power in the country. Another 37 provincial airstrips are currently out of service, according to the Civil Aviation Ministry.

Those airports are owned and largely operated by the state, but recent tenders excited international firms that were tempted by opportunities to manage Yangon and Mandalay airports under concession agreements.
 
Involving the private sector in the management of the major airports is designed to attract new airlines and modernise the key hubs for Myanmar’s future.

“When [we] reformed to the market economy system, we proposed to invite the private sector participation in aviation,” said Win Swe Tun, deputy director general of the Myanmar Department of Civil Aviation.

“Firstly, [we plan] to develop the international airports by the partnership with foreign firms which are capable of investing, operating and maintaining them on a long-term concession basis. We expect the concessionaires to attract the aircraft operators and create more routes,” he adds. 

Yangon International Airport is already operating above capacity, with three million people travelling through its 2.7mppa capacity terminal in 2012 – and numbers are set to rise again this year. 

The Yangon terminal reopened after refurbishment in 2007, and there are already plans to expand it to handle 5.5 million passengers a year by 2015. Pioneer Aerodrome Services, a local firm with connections to Singapore, was in August awarded the concession to run the airport, fighting off competition from international infrastructure firms.

Meanwhile, a concession to run Mandalay International Airport was awarded to a Japanese consortium led by the Mitsubishi Corporation.
Airlines landing
Visitors arriving from certain destinations can now obtain visas on arrival. Long gone are the days of strict background checks on anyone entering the country and a blacklist for journalists and anyone seen as likely to make trouble for the military regime.

Ownership of flag carrier Myanmar International Airways is split between the government and a local bank and its routes remain limited mainly to other South East Asian nations, as well as China, India and Japan.

A number of international carriers that are keen to have early advantage have recently entered the market.

In 2012, Qatar Airways and South Korea’s Asiana began flying to the commercial capital of Yangon.

Asiana flies twice weekly from Seoul, while Qatar operates thrice-weekly from Doha. Japan’s All Nippon Airlines has also snapped up a 49% equity stake in Myanmar carrier Asian Wings Airways in its bid to gain early mover advantage in the market.

Growth in visitors has seen new smaller airlines and low-cost carriers coming into the market, with three regional carriers, Thailand’s Nok Air and Business Air, and Tigerair of Singapore, announcing they will be joining the 22 international airlines that now fly through Yangon, the country’s biggest airport.

It is hoped even more routes will be set up as the Association of South East Asian Nations’ Open Skies initiative, expected in 2015, opens the region’s aviation sector.

A flurry of new domestic carriers has emerged as well, as travellers choose not to endure the long bus journeys and longer train rides that characterise terrestrial travel. But there have been safety concerns over a lack of oversight on domestic carriers, especially after an Air Bagan flight crash-landed at Heho airport in Shan state in December, killing two and injuring 11 others.

The DCA’s Win Swe Tun says the relatively new civilian government was learning from examples of modernisation elsewhere, such as the operation of Cambodia’s airports by French infrastructure giant Vinci, which lost out but was named as back-up bidder in the tender to operate the Mandalay airport.

“We have a consultant group and we are learning the other examples, including the lesson of the Cambodian case. We understand the value of the geographical location of Myanmar and good potential of development.”

And, Win Swe Tun says, private involvement would not stop with concessions to operate the airports.

“Secondly, we intend to invite for the aviation-related business such as capacity building, cargo handling, aircraft catering, refuelling services etc. Thirdly, we will invite the foreign and domestic private investors to participate in domestic airports.”

An ambitious plan to build an entirely new airport drew initial bids from 11 firms. The 12mppa capacity hub serving Yangon will cost a reported $1.1 billion and will be located about 80km away from the city in Bago region.

In early August, the government awarded the preferred bidder status on the project to South Korea’s Incheon Airport Consortium, which is expected to complete construction in 2018 and operate the airport for up to 50 years.

Growing tourist numbers

There are reasons to expect a boom in tourist numbers, but, for now, foreigners are still a relatively rare sight, even in Myanmar’s major cities, and nothing like as omnipresent as in neighbouring Thailand. But the country has the potential to offer a similar tourism experience, without the over-development and weariness that have overtaken some Thai hotspots.

Coastal regions and tropical archipelagos offer unspoilt beaches, sites such as Bagan have ancient religious sites and the cities retain a quantity of colonial architecture that is long-forgotten in most South East Asian capitals.

With help from the government of Norway and the Asian Development Bank, Myanmar has launched a $320 million masterplan to cater for foreign tourists, which currently number about one million per year, but are growing fast. That plan includes projects to increase passenger capacity at the Nay Pyi Taw and Mandalay international airports, and a tourist police service to avoid the regional scourges of child trafficking and sex tourism finding a new home.

Myanmar has already begun moving from a destination for daring independent travellers keen to see behind the curtain, to an attraction for high-end tourists from the West.

UK-based luxury tour operator Cox & Kings resumed tours in the country in October 2010, a month before elections that, while seen as flawed, marked the beginning of what has proved a tricky but rapid transition from dictatorship.

Cox & Kings’ spokeswoman Katie Parsons says the company’s escorted group tour quickly became the fastest selling among the company’s East Asian tour packages.

“For many people it’s a new destination that is only now opening up to tourism,” she says.

“It’s been popular with backpackers, but is only now becoming more accessible to the luxury markets.”

The company uses domestic flights to get visitors around the country, with the most popular destinations being the major cities, temple town Bagan and the trekking territory around Inle Lake. Parsons says the tour was selling well, but the country was struggling to meet its growing number of tourists. “It is becoming increasingly difficult to secure block allocation of rooms for tours as the destination becomes more popular. All of our tours run at maximum capacity,” she says.

These tourism trends are also noted in a report by global consultants McKinsey and Co, which in May estimated that tourism, which contributed an estimated $600 million to Myanmar’s gross domestic product in 2010, could be worth $14.1 billion by 2030, with visitors from other Asian countries increasingly flying in.

Such growth, however, depends on infrastructure improvements, the consultants said.

“To unlock the potential of the [tourism] sector, the government could play an enabling and co-ordinating role. Among the priorities it could consider are liberalising the transport sector and easing visa entry requirements; ensuring that supported infrastructure such as air, water, rail and road infrastructure is in place to support the expansion of hotels and airports; removing bureaucratic barriers to investment; and putting in place national marketing campaigns to attract tourists,” the report said.

Myanmar is clearly on the brink of major tourism and aviation growth, but infrastructure challenges will dictate whether the country is able to truly make the most of the many tourism and economic opportunities that are out there.

source: RoutesNews
http://www.routes-news.com/tourism-and-destinations/4-tourism-destinations/1955-open-doors