FMI Air suspends services as domestic aviation industry squeezed

By FRONTIER

YANGON — FMI Air will suspend its services from July 20 after less than six years in operation, a company spokesperson has confirmed, in the latest sign of pressures in Myanmar’s domestic aviation industry.

The airline was founded by businessman Serge Pun in September 2012 to operate commuter flights between Yangon and Nay Pyi Taw and has since expanded to several tourist destinations including Thandwe, Myeik and Kawthaung.

A spokesperson said the company could not comment on the decision to stop operating and that further details would be released on Friday.

In June 2015, First Myanmar Investment reduced its stake in FMI Air to 10 percent, selling a 40 percent equity stake to Yangon Land, a subsidiary of Serge Pun and Associates. 

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At the time, the company said in a disclosure document to the Yangon Stock Exchange that it expected competition in the domestic airline industry to intensify. “We are of the opinion that the aviation industry will require consolidation to be more efficient,” it said.

It was reported earlier this month by industry website ch-aviation.com that FMI Air was in talks with AirAsia Group to set up a new low-cost carrier in Myanmar, but the report said the deal fell through due to opposition from Myanmar’s Department of Civil Aviation.

The Malaysian company’s chief executive Mr Tony Fernandes told Reuters earlier this year he was in talks with a “potential partner” but said in May that negotiations had stopped. An FMI spokesperson declined to comment.

U Win Khant, permanent secretary of the Ministry of Transport and Communications, told Frontier today that Air Bagan and Apex Airlines had also suspended services in recent years.

Local airlines have been hurt by a slowdown in the tourism industry, he said. “If tourist numbers decrease, it will affect the domestic airline industry because most local people do not travel by air.”

He said conflict in Rakhine State had led some tourists to believe that travel to Myanmar was unsafe, which has impacted related industries.

The closure of some of Myanmar’s domestic airlines has been anticipated for some time; in 2016, aviation industry consultancy CAPA-Centre for Aviation said it was “staggering” that 10 domestic carriers were serving a market of just over two million passengers.

High fuel prices have kept ticket prices high, while a lack of passengers, particularly during the monsoon season, has made many routes unprofitable.

In May this year, CAPA said the market had huge potential, but that it “continues to suffer from overcapacity and a lack of profitability” and that consolidation “seems inevitable”.

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