November 21, 2014

Two years on and Myanmar finally decide on public-private partner for Mandalay Airport expansion program

It has taken nearly two years to come to a decision, but one has finally been made regarding the future of Myanmar’s second largest airport, located at Mandalay. Back in early 2012 when landmark elections were won by Aung San Suu Kyi’s National League for Democracy, it was identified early on that with the opening up of the country (formerly known as Burma), the aviation business would be one of the major winners. Myanmar was seen as the least well-served market in aviation terms probably in the whole of Asia, with new opportunities for every type of carrier – local and foreign, international and domestic, low-budget and long-haul. At the time it was also decided that the airports at Rangoon and Mandalay should be partially privatized, while the new Naypyitaw airport would begin to handle international flights almost immediately. Mandalay has always been a popular tourist destination and in 2011 it saw just under 500,000 passengers, of which roughly 50,000 were international. In 2012 Mandalay had only one scheduled international service, to Kunming in China.
The public-private joint-venture project at Myanmar was opened up to offers in early 2012 and by mid-December that year, seven candidates had been shortlisted from a group of sixteen. It has now been announced that the consortium set up to operate Myanmar’s second largest airport and expand it into becoming a regional hub will be Japan’s Mitsubishi and Jalux, in partnership with Myanmar’s Yoma. The agreement covers a thirty year contract under a specifically created company called MC-Jalux Airport Services.
According to Mitsubishi, the airport partnership at Mandalay will “generate further expansion of domestic and international flights”, hopefully from March next year. Today Mandalay airport can handle up to three million passengers a year, though it only had 750,000 in 2013. However despite the low volume of air travel, Myanmar’s aviation safety record is nine times worse than the industry average, a problem which is being simultaneously addressed. The Japanese International Cooperation Agency (JICA) is providing a grant for improved safety equipment to be installed at six airports, with Japan’s Sumitomo identified as the principal contractor.
The future looks very busy for the aviation industry in Myanmar as there are over thirty domestic airports which are also being considered for upgrading and being offered to an international operator for management. In addition, a Japan-Singapore consortium will build a fourth international airport in Myanmar, at a cost of US$1.5 billion, just north of Yangon.



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