YANGON UNIVERSITY OF ECONOMICS

MASTER OF DEVELOPMENT STUDIES PROGRAMME

A STUDY ON DEVELOPMENT OF AIRLINE SERVICES AFTER LIBERALIZATION IN AVIATION INDUSTRY OF MYANMAR (Case Study: Customer Perspective on Myanmar National Airlines)

AR YU EMDevS -3 (14th Batch)

AUGUST, 2019 YANGON UNIVERSITY OF ECONOMICS

MASTER OF DEVELOPMENT STUDIES PROGRAMME

A STUDY ON DEVELOPMENT OF AIRLINE SERVICEs AFTER LIBERALIZATION IN AVIATION INDUSTRY OF MYANMAR (Case Study: Customer Perspective on Myanmar National Airlines)

This thesis is submitted as a partial fulfillment of the requirements for the degree of Master of Development Studies

Supervised By: Submitted By :

Dr. Cho Cho Thein Ar Yu Professor & Head Roll No: 3 Department of Economics EMDevS 14 Batch Yangon University of Economics (2016 – 2018)

AUGUST, 2019

ABSTRACT

Aviation is key connecting tool for human, goods and other purposes including transportation, trade, tourism and agriculture in every country. Myanmar National Airways is pioneer aviation services and developing safe, reliable and secure civil aviation in Myanmar. This thesis aims to examine the factors influencing MNA’s service to improve the operational efficiency of the MNA facility. A descriptive method is used with primary data as well as secondary data. All modes of transport infrastructure begin emerging after 1988 including growing of private airlines together with former state owned airlines, Myanmar National Airways. The corporatization of Myanmar National Airways in 2014 is one of the key achievements of new Democratic Myanmar. This study found out that there are still some challenges like low level of investment, lack of efficient Institutions and Infrastructure in Myanmar Aviation Transportation. In addition, it concludes suggesting like reducing the bureaucratic management and improve banking and IT systems to perform the tasks more efficiently.

YANGON UNIVERSITY OF ECONOMICS MASTER OF DEVELOPMENT STUDIES PROGRAMS

This is to certify that the thesis entitled, “A Study on Development of Civil Aviation Airlines Industry after Liberalization in Myanmar” submitted as a partial fulfillment towards the requirement for the degree of Master of Development Studies has been accepted by the Board of Examiners.

Board of Examiners

1. Dr. Tin Win

Rector

Yangon University of Economics (Chief Examiner)

2. Dr. Ni Lar Myint Htoo

Pro-Rector

Yangon University of Economics (Examiner)

3. Dr. Kyaw Min Htun

Pro-Rector (Retired)

Yangon University of Economics (Examiner)

4. Dr.Thabyay Nyo

Professor

Department of Economic

Yangon University of Economics (Examiner)

5. Dr. Khin Thidar Nyein

Professor

Department of Economic

Yangon University of Economics (Examiner)

AUGUST, 2019 ACKNOWLEDGEMENTS

During the study period, although some subjects were found difficult to learn, the unique finding was all the lecturers are very enthusiastic in respective subjects. So, all lectures were greatly thankful people for EMDevS course. I would like to acknowledge my indebtedness to Professor Dr. Tin Win, Rector of the Yangon University of Economics, and Professor Dr. Nilar Myint Htoo, Pro-Rector of Yangon University of Economics. I also express my appreciation and thanks to Professor Dr. Cho Cho Thein, Programme Director and Head of Department of Economics, Yangon University of Economics, who was much more than the Programme Director, but a voice always available to help. Again to my supervisor Dr. Cho ChoThein, thank you for your timely advice and comforting support. Thanks for showing me that each problem always has different perspectives and that we should never lose sense of the big picture. And Dr. Thida Kyu, thanks for your support and guidance during my study. I would like to thanks my beloved family and seniors and working colleague from Myanmar National Airlines (MNA) for the daily support that made me feel that I could always count on them. Thanks are extended to Mann Yadanarpon Airlines (MYP), Air KanBawZa Limited (KBZ) AND Golden Myanmar Airlines (GMA) for allowing me to chase my studies and providing necessary data of the airlines and aviation industry in Myanmar. To all my EMDevS friends especially Group 2 members, who turned the long study periods, the group projects and the leisure times into unforgettable moments. To the participants of my research, thank you for your precious time and for each contribution to this piece of work.

Last but not least, my deepest thanks with all my heart are saved for my parents, who were always supporting me. Table of Contents

ABSTRACT i ACKNOWLEDGEMENTS iii TABLE OF CONTENTS iv LIST OF TABLES viii LIST OF FIGURES ix LIST OF ABBREVIATIONS xi

CHAPTER I INTRODUCTION 1.1 Rationale of the Study 1 1.2 Objectives of the Study 2 1.3 Method of Study 2 1.4 Scope and Limitation of the Study 2 1.5 Organization of the Study 3

CHAPTER II LITERATURE REVIEW

2.1 Transportation in General 4

2.2 Role of Transportation in Economic Development 11 2.3 History and Development of Airline Industry 12 2.4 Liberalization in Aviation Industry 14 2.5 Social and Economic Impacts of Air Transportation 22 2.6 Reviews on Previous Studies 25

CHAPTER III HISTORY AND DEVELOPMENT OF AIRLINES IN MYANMAR

3.1 Overview on Myanmar Civil Aviation 27 3.2 Air Transport Freight in Myanmar 32 3.3 Domestic Airlines in Myanmar 33 3.4 Comparison of Airline Structures 40 3.5 Myanmar Air Travel Demand 46 3.6 The Nature of Domestic Airline Business in 50 Myanmar: On-board Services 3.5 Propensity to Fly 53 3.6 Transfer Product 54

CHAPTER IV MNA’S SERVICE DEVELOPMENT AFTER LIBERALIZATION IN MYANMAR AND ANALYSIS ON CUSTOMER SATISFACTION OF MNA 4.1 Survey Profile 56 4.2 Survey Design 56 4.3 Survey Findings and Summary 57 4.4 Development of MNA: SWOT Analysis 65 Summary of Customer Satisfaction and 83 4.5 Recommendations on MNA’s services

CHAPTER V CONCLUSION 5.1 Findings 85 5.2 Suggestions 86 REFERENCES 88 APPENDIXES LIST OF TABLES

No. Title Page No

Table 2.1 Advantages and Disadvantages of Transportation by Mode 10 Table 3.1 Annual Departing Seats in Myanmar 2007-2016 (in millions) 29 Table 3.2 Top 15 Airlines in Myanmar as of Summer 2017 30 Table 3.3 International weekly routes from Myanmar Summer 2017 31 Table 3.4 Air transport freight in Myanmar 33 Table 3.5 Tier 1 and Tier 2 Airlines in Myanmar 39 Table 3.6 Myanmar Passenger Growth Vs GDP 47 Table 3.7 Ground Handling Services of MNA (1996-2012) 51 Table 3.8 MNA Providing Ground Handling Services with Various 52 Airlines Table 3.9 Income from Ground Handling Services of MA (1996-2017) 52 Table 4.1 Demographic Summary of Respondents 57 Table 4.2 Online Ticket Reservation 58 Table 4.3 Devices used by respondents 59 Table 4.4 Website Usability 59 Table 4.5 Booking tickets online 60 Table 4.6 Website’s resourcefulness 60 Table 4.7 Supportiveness of ground staffs 61 Table 4.8 Clear Information about Check-in process 61 Table 4.9 Satisfaction of inflight services 62 Table 4.10 Quality of Airline meal and Catering 62 Table 4.11 Seats on board 63 Table 4.12 On-time flight information and flight status 63 Table 4.13 Special services 64 Table 4.14 Summary of Services and Customer Satisfaction 64 Table 4.15 SWOT Analysis 65 Table 4.16 Fleet Growth in MNA 71 Table 4.17 Seat Capacity Growth of MNA 2014 -2017 72 Table 4.18 MNA Seat Growths by Market 2014-2017 73 Table 4.19 Annual Seat Capacity 74 Table 4.20 MNA Domestic Network Expansion by seats 2015 – 2017 74 Table 4.21 MNA Domestic Network Capacity Changes 2014 vs. 2017 76 Table 4.22 Passengers and Freight traffic by MNA 77 Table 4.23 Monthly Passenger Performances 79 Table 4.24 Summary of Profit and Loss 2015-2017 80 Table 4.25 MNA Revenue in International Network 80 Table 4.26 Summary of Profit/ Loss and Revenue 2015 -2017 81 Table 4.27 Revenue from Other Businesses of MNA 82 LIST OF FIGURES

No. Title Page

Figure 2.1 The relative contribution of different modes of transport to 11 economic growth Figure 3.1 Air transport passengers carried in Myanmar over the past 46 28 years Figure 3.2 International weekly routes from Myanmar Summer 2017 32 Figure 3.3 Air Transport Freight in Myanmar 33 Figure 3.4 Myanmar Domestic Airline Share 44 Figure 3.5 Myanmar International Airline Share 45 Figure 3.6 Myanmar Passenger Growth vs. GDP 47 Figure 3.7 Approach to Economic Focus 47 Figure 3.8 Organization Chart of MNA 49 Figure 3.9 MNA Transfer Flows at Yangon 55 Figure 4.1 MNA Fleet Evolution (High Growth): 2014-2017 72 Figure 4.2 MNA Seat Growth by aircraft 72 Figure 4.3 MNA Seat Growths by Market 2014-2017 73 Figure 4.4 Annual Seat Capacity 74 Figure 4.5 Network Development of MNA 75 Figure 4.6 MNA Domestic Network Capacity Changes 2014 vs. 2017 76 Figure 4.7 MNA Domestic Network Capacity Changes 2014 vs 2017 77 Figure 4.8 MNA Revenue in International Network 80 Figure 4.9 Annual Profit and Loss Overall 2015-2017 81 Figure 4.13 Revenue from Other Businesses of MNA 82 Figure 4.14 Key findings of Customer Satisfaction and Recommendations 83 MNA Services LIST OF ABBREVIATIONS

ATC - Air Traffic Control ATM - Automated Teller Machine ARFF - Airfield Rescue Fire Fighting BKK - Bangkok CAA - Civil Aviation authority CAT – Category CAGR – Compound Annual Growth Rate CUSS - Common Use Self Service DCA - Department of Civil Aviation DCV - Dynamic Capability Vision DEA - Data Envelopment Analysis EMDevS - Executive Master of Development Studies FAA - Federal Aviation Administration FIDS – Flight Information Display System GDP - Gross Domestic Product GDS - global distribution system ICAO - International Civil Aviation Organization IATA - International Air Transport Association IT - Information Technology KPIs - Key Performance Indicators LOS- Level of Service LCC – Low Cost Carrier MNA – Myanmar National Airlines MNL – Manila MNR – Minimum Noise Routing OGA – O.G Aviation Canada Co.Ltd PAS – Pioneer Aerodrome Service RFID - Radio Frequency Identification RGN - Yangon SFC - Slot Facilitation Committee SLA - Service Level agreement STOL - Short Takeoff and Landing VTOL - Vertical Takeoff and Landing YIA - Yangon International Airport

CHAPTER I INTRODUCTION

1.1 Rationale of the Study

Air Transport is one of the fastest modes of public transport which connects all parts of domestic places and international boundaries. Air Transport allows people from different places of the country to move one place to another and people from the different countries to cross international boundaries and travel countries for personal, business, medical, and tourism purposes. Although, air transport provides the fastest means by saving the time of journey, another aspect of air transport sector is the one of the important sector for a country’s economic development. Air transport is an important enabler to achieving economic growth and development. Air transport facilitates integration into the global economy and provides vital connectivity on a national, regional, and international scale. It helps generate trade, promote tourism, and create employment opportunities (World Bank, n.d)

Air transportation is a growing industry that has positive impacts on Myanmar’s economic and social aspects over the years, development of Myanmar National Airline is prominently acknowledged as country’s pioneer Airline among the Airline business in Myanmar.

According to the government report seen in newspaper in 2014, Air travel demand is driven by a range of macro-economic factors. The outlook for these macro-economic drivers in Myanmar is strong which should be the catalyst for rapid traffic growth. In the year to April 2014, there were 2.3 million international tourist arrivals to Myanmar, an increase of 72% compared with the previous year. Arrivals by air accounted for 41% (0.9m) of this total, with an increase of 40% compared with the previous year. In the case of Myanmar specifically, the focus on this thesis, demand for air travel has been rising steadily driven by the country’s economic growth and improved distribution of Wealth, particularly since previous decades.

This thesis is to understand the development of airline services after liberalization in Myanmar and customer perspective on services of the Myanmar National Airlines. This thesis can also be used to identify current major operational inefficiencies, as well as the potential innovations that can be developed in order to solve or minimize the problems. To provide a broader perspective of the subject, anticipated challenges to the implementation of solutions can also be placed and analyzed. The data collection was developed through interviews with some key management officials of Myanmar National Airline, in addition to archival documents and existing literature.

1.2 Objective of the Studies

The main objective of this thesis is to analyze the factors influencing the service development of MNA in Myanmar, SWOT analysis and customer satisfaction after liberalization.

1.3 Method of Study

A descriptive method is used with both primary and secondary data, and conducting survey on passengers. These data are relied on a broadly-based literature review of relevant publications from different sources. The sources used include the government reports, publications produced by other National and International Airlines, World Bank Group.

1.4 Scope and Limitation of the Study

This study is only focused on domestic airline services of MNA and both primary and secondary data is used to analyze the study. The study is only limited to the period from 1996 – 1997 to 2015 – 2017.

1.5 Organization of the Study

This study consists of five chapters. The first chapter is the introduction of the study. Chapter two presents a review of literature on operational efficiency in airports and service innovation. It also compares some conceptual frameworks on the use of innovation in services as a means to enhance operational efficiency. The third chapter describes Case study of Myanmar National Airlines. Chapter four includes the data gathered through interviews, literature about current challenges and problems of airline business industry in Myanmar. Chapter five discusses the main findings and suggestions to the literature like reducing bureaucratic management within organization and improving IT technologies in airline services. CHAPTER II

LITERATURE REVIEW

2.1 Transportation in General

Transport or transportation is generally defined as the movement of people and goods from one location to another. Modes of transport include air, rail, road and water. The field can be divided into infrastructure, vehicles, and operations. Transport is important since it enables trade between peoples, which in turn establishes civilizations. (https://en.wikipedia.org/wiki/Transport)

A vehicle is sort of machine that is used to move people and goods. It moves along with the cargo and riders. Vehicles that do not operate on land are usually called crafts. Vehicles travelling on these networks include automobiles, bicycles, buses, trains, trucks, boats, helicopters, and aircraft. Operation deal with the way the vehicles are operated. Both passenger transport and freight play an important part in economic development of the country and globalization.

The major transportation problems are little or no provision of transportation facilities, poor public transport facilities, inadequate parking, and increasing number of vehicles. These all problems have a high impact on mobility. Mobility is defined as the access of transportation. It is not important in travel demand models to determine choice available to the consumer.

The first means of transport in human history were people's feet. After somebody had invented a wheel, a lot of various types of vehicles were developed. At present there are a lot of means of transport which help people to move from one to another place, to get to very distant places in a very short time, to overcome seas and oceans and even fly to the stars, to transport huge amounts of goods. People travel in order to reach places that are close or far away, they travel for fun or from necessity. Travelling takes up more time in our lives than most of us imagine. An everyday form of travelling may be going shopping, commuting to school, to work or visiting friends. There are two ways of travelling: one is using our own means of transport and the other is to rely on the public transportation services. People and goods can be transported by land, by air or by water.

2.1.1 Land transport

Land offers the greatest variety of means of transport. There are motor road vehicles and bicycles on the one hand and rail on the other. Personal vehicles (a coupe, a saloon, a convertible car etc.,), motorcycles and Lorries are the most common. There are also other means of transport on four wheels - buses and trolleybuses. Of rail vehicles, which are almost exclusively designed for public use, we could mention trains, trams, and the underground. (means of transport: http://tgacv.cz )

Cars and motorbikes are expensive to purchase and in addition one also has to pay for petrol, which if the vehicle has a big consumption, costs a lot of money as well. For short and middle distances a car is fast enough so as not to get too tired by travelling, unless we get into a traffic jam. Also the space for luggage in the trunk of the car is quite large. The best thing about cars is that they can almost anywhere at any time at moderate price. Modern cars with soft seats and a lot of space for the legs are sometimes even more comfortable than the interior of a plane.

Little children like to ride their bikes and scooters; the teenagers would like to drive their motorcycles or cars. On the roads there are many other types of vehicles: vans and Lorries transport various kinds of goods. Dust-cars take away litter from our homes, cisterns are used for transportation of liquid goods (petrol, some chemical products and so on), fire-cars drive very fast along the roads when there is a fire somewhere, and the police have special cars too. Sometimes we can see long container Lorries on the roads. They transport goods put into large containers. The farmers use jeeps, tractors and combine harvesters.

a) Rail Transport - Rail transport is a commonly used mode of long-distance transportation. Rail transport is where a train runs along a set of two parallel steel rails, known as railway or railroad. The rails are anchored perpendicular to ties of timber, concrete or steel, to maintain a consistent distance apart, or gauge. The rails and perpendicular beams are placed on a foundation made of concrete or compressed earth and gravel in a bed of ballast.

b) Road Transport - A Road is identifiable route, way or path between two or more places. Roads are typically smoothed, paved, or otherwise prepared to allow easy travel. The most common road vehicle is the automobile. Other users of roads include buses, trucks, motorcycles, bicycles and pedestrians. Automobiles offer high flexibility and with low capacity but they are the main source of noise and air pollution in cities. Buses allow for more efficient travel at the cost of reduced flexibility. Road transport by truck is often the initial and final stage of freight transport.

2.1.2 Water Transport

Waterborne transport includes maritime and inland waterway transport. Both perform freight as well as passenger transport. Maritime transport is divided into short sea shipping (coastal transport) and deep-sea shipping (long-trade navigation). Short sea shipping includes the movement of cargo and passengers, mainly by sea along a coast. However, it also covers maritime transport between the EU Member States, other states in the Baltic Sea and the Mediterranean as well as Norway and Iceland. In EU-28, short sea shipping represented 60% of total maritime transport of goods in 2012. (https://oshwiki.eu/wiki/Water_transport_%E2%80%93_OSH_issues)

The main fact that speaks for water transport are the relatively small costs. That is why rivers, seas, and oceans are continuously being filled with new cargo and passenger vessels. Huge tankers full of goods cruise the seas. Fishing boats and ships help fishers at their work. Ferries, ocean liners and other steamboats take quite a long period of time to carry you to the place of destination, though. The advantage is that one can take almost as much luggage as one likes. In general not many people have the courage to board a ship because although the trip is inexpensive they can still become sea-sick. For water sports or holidaymaking we use boats, motorboats, surfing, canoes, water ski, sailboats, yachts, etc.

2.1.3 Air Transport

The aviation infrastructure in particular offers opportunities for countries even without a strong financial base to be participants in international networks of services. A aviation infrastructure includes aircraft manufacturing, air traffic control, both airside and landside aspects of airports, cargo handling facilities, telecommunications, navigation and surveillance facilities, tourism, repair and overhaul resources, avionics manufacturing, repair and design capabilities, and flight training facilities. Aviation infrastructure apparently represents one of the most complex infrastructure systems of today and of tomorrow. A country's ability to contribute in air traffic control depends on technical infrastructure and location. Certain developing countries are located in central regions of heavy air traffic and others are quite remote from the major air routes across the globe. The ability of a country, which is suitably located, to benefit from such aviation related commerce requires state level agreement about the role and economic value of such participation. Air Transport enables easier access to markets, efficiency improvements & greater domestic & international competitiveness Unlike sea travel, going by air consumes huge sums of money but is the fastest way of travelling. An air ticket ensures us a comfortable seat on the plane which can fly us to any place in the world within a few hours. For private use and for some other purposes (health care, army and police needs) helicopters are usually used. Sometimes in the past, balloons and airships cruised the sky. Benefits of air transport are as follows: air transport broadens people’s leisure and cultural experiences via wide choice and affordable access to destinations across the globe. It improves living standards and alleviates poverty through tourism. It facilitates the delivery of emergency and humanitarian aid relief and swift delivery of medical supplies (IATA). Economic benefits of air transport are as follows; air transport provides the only worldwide transportation system which makes it essential for global business and tourism. There are around 5 billion air passengers annually. Air transport carries over 43 million tons of freight annually and 35% of interregional exports of goods by value and 40% of international tourists travel by fair. (Retrieved from www.iata.org/pressroom/facts_figures/fact_sheets )

2.1.4 Classification of Public Transport

Public Transportation consists of a family of modes, which range from walking and bicycles to urban freeways, metro and regional rail systems. The basic classification of these modes, based on the type of their operation and use, is into three categories:

(a) Private transportation consists of privately-owned vehicles operated by owners for their personal use, usually on public streets. Most common modes are pedestrian, bicycle and private car.

(b) Paratransit or for-hire transportation is transportation provided by operators and available to parties which hire them for individual or multiple trips. Taxi and dial-a-bus are the most common modes. The taxi (or cabs) in big cities can just be called by phone or hailed while they pass by in the street. In the mountains people sometimes use a funicular in order to get to the top of some very high hills and mountains.

Car sharing refers to automobile rental services intended to substitute for private vehicle ownership, with vehicles located in neighborhoods, are rented by the hour, and easy to check in and out. Car sharing ranges from small informal cooperatives to sophisticated businesses with many vehicles. Car sharing is increasingly common. Car sharing is not a new concept, visionaries from Buckminster Fuller to Moshe Safdie have advocated vehicle sharing as a way to use vehicles and parking resources more efficiently. The ultimate market potential of car sharing is difficult to predict. European experience indicates that car sharing can be useful to a wide range of consumers, including many relatively wealthy households that avoid owning a second or third vehicle.

(c) Urban transit, mass transit or public transportation includes systems that are available for use by all persons who pay the established fare. These modes, which operate on fixed routes and with fixed schedules, include bus, light rail transit, metro, regional rail and several other systems. The most frequent public means of transport are buses and trains. The network of bus and train stops covers most inhabited places. Public transport is cheaper, but also less comfortable. (Vukan R. Vuchic, 1981; Urban Public Transportation Systems) The present-day coach is a very comfortable type of bus often air-conditioned and equipped with video and with a possibility of some refreshment. Travelling by coach is very fast. Buses represent the most widely used transit technology. Virtually every city in the world that has transit service operates buses. Large cities with rail transit also operate extensive bus networks, usually on lines with lower passenger volumes or as feeders to rail lines. Bus service is easy to introduce or modify: basic service requires only purchase of vehicles, garage and maintenance facilities, and organization of service. Stops along the lines can be simple. Therefore, buses represent the most economical transit mode for lightly traveled lines. This flexibility of bus routes is an advantage for any necessary changes, but it is a disadvantage for major bus lines: they lack permanence, efficiency in carrying heavy passenger volumes, and image of permanent, physically fixed routes desired by passengers.

The train consists of a locomotive and some carriages. Travelling by a fast (express) train can visit a buffet car or travel in a sleeping car. But the trains in our country are sometimes dirty and a little bit dangerous. Huge amounts of goods are transported by goods trains - their carriages are called Lorries or trucks. Although rail transport is one of the most energy efficient modes today, substantial opportunities for further efficiency improvements remain. Reduced aerodynamic drag, lower train weight, regenerative breaking and higher efficiency propulsion systems can make significant reductions in rail energy use. Shipping, also one of the least energy intensive modes, still has some potential for increased energy efficiency. The bus and train stops in major cities are called stations. An ordinary railway station looks like this: a big hall with a ticket office where one can buy a single or a return ticket and a seat reservation, the departures and arrivals board, a left luggage office or lockers, telephones, waiting halls, a restaurant, a drink (soda or coffee) machine, a book- stall, a barber's shop, a lavatory and a few flowers around a little fountain. From this hall one goes through the under passage directly onto the right platform. From the platform we get on the train and look for a free seat in the non-smoking compartment. If all the seats are occupied, people must move into another carriage and try again there. In big cities underground (subways) with several different tracks have been built in order to relieve the trams and buses (the most interesting of them are the famous double-deckers in London). They are the fastest means of urban transportation and the underground trains usually go every five minutes on average. Many workers and pupils depend on the underground every morning. It can take them at a low rate from the suburbs to the city and back.

Table 2.1 Advantages and Disadvantages of Transportation by Mode

Road Rail Waterway Air Speed High Low Low Very High Door-to-Door Very High Low Very Low Low Reliability Very High High High Very High Security Very High High High Very High Flexibility Very High Low Low Low Availability Very High Low Very Low Low Emergency Low Very High Very High Very Low efficiency

Source: Multimodal Transport, Myanma Airways Brochure 2010

This table 2.1 shows the advantages and disadvantages of using different modes of transport Road, Rail, Waterway and Air. It can be obviously noticed that, when using air transport, speed, reliability and security are very high and door-to-door efficiency, flexibility, availability is quite low. Emergency efficiency is very low as per statistical data.

(a) Advantages of Air Transport It is the fastest mode of transport. It is very useful in transporting goods and passengers to the area, which are not accessible by any other means. Air transport provides comfortable, efficient and quick transport services. It is regarded as best mode of transport for transporting perishable goods. It is the most convenient mode of transport during natural calamities. It provides vital support to the national security and defense.

(b) Disadvantages of Air Transport It is relatively more expensive mode of transport. It is not suitable for transporting heavy and bulky goods. It is affected by adverse weather conditions. It is not suitable for short distance travel. In case of accidents, it results in heavy losses of goods, property and life but this is lower possible case. 2.2 Role of Transportation in Economic Development

Air transport plays a meaningful role in the social and economic development of the world economy. This mode of travel is also very capital intensive and requires heavy investments. (Ambrocius and David, 2013) The air transport industry has been experiencing constant changes as a result of changing economic, political and transport security environment. (Ba-Fail, Seraj and Jasimuddin, 2000) Airlines play a significant part of social and economic activities. Airports also enhance the connectivity of cities and countries as well as the global worlds. They also support the employment creation strategies of the country and play an essential role in business travel and tourism sectors of the economy (UJ2, 2018) There are many different studies on the importance of air transport development to economic development, and the relationship between the development of civil aviation industry and economic development. (Airport Development and Regional Economic Growth in China, 2008) One school focuses on the relationship between aviation activities and economic development. (Goetz, 1992; Chou, 1993; and Green 2002). The other school emphasizes the impact of airports on regional economic development (Bennell and Prentice, 1993; Robertson, 1995; and Debbage, 1999) The diagram below illustrates the relative contribution of various modes of mobility to economic growth in the modern era.

Figure 2.1 The relative contribution of different modes of transport to economic growth

Source: flexibility.co.uk From the figure 2.1, the external dimension of transport leads to opportunities and benefits of economic and social influence throughout the economy. When transport system is lagging behind, losses occur due to decreased international trade. In the development and diversification of trade between countries world-widely, international freight transport has an important role. Transport, by assumed role, is an important part of material production shaping the other sectors of the world economy, mainly international trade. Transport activity is a premise in achieving economic cooperation agreements, in order to bring in world circuit regions around the globe, by creating a distribution system opened to needs of potential beneficiaries.

2.3 History and Development of Airline Industry

Airline industry means that the business of transporting paying passengers and freight by air along regularly scheduled routes, typically by airplanes but also by helicopter. On Jan. 1, 1914, the world's first scheduled passenger airline service took off, operating between St. Petersburg and Tampa, Fla. The St. Petersburg-Tampa Airboat Line was a short-lived endeavor — only four months — but it paved the way for today's daily transcontinental flights. (https://www.space.com/16657-worlds-first-commercial- airline-the-greatest-moments-in-flight.html) Airplanes were around the first few years of the 20th century, but flying was a risky endeavor not commonplace until 1925. In this year, the Air Mail Act facilitated the development of the airline industry by allowing the postmaster to contract with private airlines to deliver mail. Shortly thereafter, the Air Commerce Act gave the Secretary of Commerce power to establish airways, certify aircraft, license pilots, and issue and enforce air traffic regulations. The first commercial airlines included Pan American, Western Air Express and Ford Transport Service. Within 10 years, many modern-day airlines, such as United and American, had emerged as major players.

In 1938, the Civil Aeronautics Act established the Civil Aeronautics Board. This board served numerous functions, the two most significant being determining airlines' routes of travel and regulating prices for passenger fares. The CAB based airfares on average costs, so because airlines couldn't compete with each other by offering lower fares, they competed by striving to offer the best quality service. If the CAB found an airline's service quality was lacking on a certain route, it would allow other carriers to begin operating on that route. In this environment, established airlines enjoyed an advantage over startups, as new carriers found it difficult to break into existing routes. The Federal Aviation Agency, now known as the Federal Aviation Administration, was created in 1958 to manage safety operations. In the mid-1970s, Alfred Kahn, an economist and deregulation advocate, became chairman of the CAB. Around the same time, a British airline began offering exceptionally inexpensive transatlantic flights, awakening a desire for U.S.-based airlines to lower their fares. These influences led to Congress passing the Airline Deregulation Act of 1978, ushering in an era of unencumbered free market competition. The CAB disbanded a few years thereafter. (GuruFocus, 2017; Airline Industry- The Past) Post-deregulation, new carriers rushed into the market, and new routes directly connected cities previously accessible only via a string of layovers. Fares dropped as competition and the number of customers increased. A 1981 air traffic controllers strike brought a temporary setback to the growth, which continued throughout the 1980s. Some of the major carriers who had dominated the skies during the middle portion of the century, such as Pan American and TWA, began to collapse in the wake of competition. Such carriers disappeared completely following the Gulf War and subsequent recession of the early 1990s. Surviving airlines rode out the recession and returned to record profitability by the late 1990s. In 2001, the industry dealt with the effects of another economic downturn, as business travel decreased substantially while labor and fuel costs increased. The events 9/11 greatly magnified the airlines' issues, leading to a sharp decline in customers and significantly higher operating costs. Losses continued for years; the industry as a whole didn't return to profitability until 2006. A relatively stable period followed, although controversies arose over service quality and passenger treatment in terms of flight delays, particularly those involving planes waiting on the runway. In 2010 and 2011, the U.S. Department of Transportation issued a series of rules mandating that the airlines provide adequate modifications for passengers in extenuating circumstances (Grahamites, 2017). The International Air Transport Association (IATA) predicts a large increase in air traffic in the next few years, which is also certain to increase the number of jobs all through the airline industry. In addition to the travelers, the amount of cargo traveling by airlines is also expected to rise – by about another 50 percent. It all spells new jobs for many people in the airline industry. The increase in air traffic and cargo will certainly mean more jobs. While the industry does see a share of buyouts and mergers, the expected growth means more jobs. The industry has needs for: • Flight crew – pilots, flight engineers, navigators, flight attendants, and more. • Air traffic controllers • Ground crew – for service and maintenance of all aircraft components • Baggage handlers • Ticket and ramp agents • Security, etc.

2.4 Liberalization in Aviation Industry The aviation industry is the business sector dedicated to manufacturing and operating all types of aircraft. Air traffic controllers, when they are awake, are concerned with aviation safety. Regarding the concept of Liberalization, the term refers to a relaxation of previous Government restrictions, usually in areas of social or economic policy, it is a term used for economic liberalization especially trade liberalization or capital market liberalization. In the context of air transport liberalization means the opening up of the market access to airlines of other nationalities, and hence the theory behind ‘open skies’ (Clarke, 1994). Retrospectively, bilateral air service agreements have provided the framework under which fares and service frequency between two countries are determined. The first development of air service agreements appeared at the end of World War II during the Chicago Convention in 1944. Bilateral agreements define the conditions and privileges of airlines of both countries and cover items such as: traffic rights, authorized points, capacity, pricing, and designation. For a long period, bilateral agreements were the primary instrument for liberalizing international air transport services (Inter VISTAS, 2015). In the late 1970s, the U.S. began the process of deregulating its domestic commercial aviation industry by diminishing government control over fares, routes, and market entry. Following the success of this experiment, many countries deregulated their domestic airline markets; however, liberalization of international airline markets has been slower to progress (Inter VISTAS, 2015). An important development in the liberalization of air transport services was the emergence and subsequent expansion of “open skies” bilateral agreements. The purpose of open skies agreements is to eliminate governmental restrictions regarding international route rights, the number of designated airlines, capacity, frequencies, and types of aircraft that could be operated on specific routes. In 1992, the first open skies agreement was signed between the U.S. and the Netherlands. Since then, over 160 open skies agreements have been established. Still, all but a few countries prohibit foreign competition in their domestic markets by banning both the operation of foreign carriers between domestic points and cross border ownership of national airlines (Inter VISTAS, 2015). A vast body of literature has explored the impacts of international air service liberalization. This literature has yielded important insights on how the progressive deregulation of airline operations has fostered the industry’s development. By removing government regulatory impediments, airlines have been better able to compete with each other, leading to efficiency improvements and price reductions. These improvements have generated positive impacts on the entire economy. An overwhelming majority of the peer-reviewed research shows that liberalization confers a significant range of benefits to users (passengers, shippers, aviation dependent industries), including lower fares, higher traffic, and “wider economic benefits”. Liberalization has tended to generate an initial jump in benefits that subsequently moderates after the market is allowed to adjust to a more unconstrained basis. Further, liberalization has generated different levels of benefits depending on whether the bilateral agreements covered developed versus developing economies. Where bilateral agreements liberalized air service, fares tended to drop between 10% and 40%, depending on the methodology used for the estimate and the time period studied. Passenger traffic levels in liberalized country pairs increased between 18% and 78% compared to country pairs that remain under restrictive agreements (Inter VISTAS, 2015). Only a few papers estimated limited or a complete lack of benefits from liberalization. While there are some theoretical studies that suggest liberalization could have detrimental effects, there are no empirical studies that establish negative impacts. This section summarizes much of the peer-reviewed literature that has been published over the past 20 years (Inter VISTAS, 2015). The term ‘Open Skies’ refers to a bilateral or multilateral Air Transport Agreement, which liberalizes the rules for international aviation markets and minimizes (or eliminates) Government intervention: the provisions apply to passenger, cargo and combination air transportation on scheduled and charter services. Further, an open skies environment promotes a system based on competition, where air transport is run like any other business, and which facilitates the expansion of the air transport industry. It eliminates the abuse of a dominant position, offers the public better services at lower prices, and eventually creates new economic opportunities and helps to achieve economic growth, provided that the highest degree of aviation safety and security remains in place, and that possible abuses and market instabilities, such as capacity dumping and cutthroat competition, are avoided. Competition is generally accepted as being good for economy because it encourages firms to be cost-efficient; it drives down prices and leads to expanding output (ICAO Secretariat, 2016). The United States, adopted the bilateral model with a strictly balanced trade of rights with its partners. In 1978, the liberalization of the domestic air transport market in the United States removed barriers to market entry (Brueckner, 2000). By eliminating protected domestic markets, liberalization in the United States also prompted airlines to seek new opportunities for growth in international markets (Hansson, 2001). This involved route rights, as well as charter operating rights and other commercial opportunities concerning pricing freedom. In 1995, the United States conducted a broad review of its aviation goals and strategies, and by the end of 1995, it concluded nine open skies agreements with European countries. According to (Hansson, 2001), the United States continues to seek to conclude open skies agreements and its policy revolves around the following: (a) Direct and one-to-one contact with each country based on the particulars of each country, allowing code-sharing, including third party code-sharing: to date, the United States has concluded open skies agreement with more than 76 countries around the world, including agreements with seven Arab countries, namely, Bahrain, Jordan, Kuwait, Morocco, Oman, Qatar and United Arab Emirates; (b) Multilateral agreements to liberalize international air transport: the first such agreement, the Multilateral Agreement on the Liberalization of International Air Transportation (MALIAT), entered into force on 21 December 2001, and includes Brunei Darussalam, Chile, New Zealand, Samoa, Singapore and Tonga, as well as the United States. The Cook Islands joined the Convention, on 23 July 2006. The agreement includes open traffic rights, including the seventh freedom and is aimed at creating new investment opportunities for airlines, and launching new airlines in concerned markets, particularly through the elimination of many restrictions regarding foreign ownership stipulated in the bilateral agreements (Brueckner, 2000). (c) Euro-American talks to liberalize skies across the Atlantic in March 2008 saw the wrapping up of the biggest open skies accord in the history of the air transport industry between the European Union and the United States. This agreement will draw on a market of 750 million inhabitants and 56 Multilateral Agreement on the Liberalization of International Air Transportation. Other issues involve American laws of airline ownership and control that are partly designed to protect American carriers but also to satisfy the United States military, which maintains the Civil Reserve Air Fleet by drawing on commercial fleets for airlift during national emergencies (Cooper and Smith, 2005). The airlines, as a quid pro quo, benefit with priority over the carriage of military and Government personnel. Other issues include the tax free position of European Union-United States aviation and the harmonization of antitrust policies to protect against predatory behavior (Hansson, 2002). Studies by (Hansson, 2002), further indicate that the parties agreed on the principle of the liberalization of airspace between them, and began negotiations on a draft agreement. It is also worth noting that on 5 December 2006, the United States Department of Transportation withdrew a proposal regarding the International Investment Rule and expressed its commitment to working on an open skies agreement. This proposal would have changed rules governing international investment in United States airlines (Brueckner, 2000). The withdrawal came after the Department reviewed a multitude of public comments, including those from the United States Congress. The original proposal, first issued by the Department in November 2005, and later amended in May 2006, would have allowed international investors more input into the marketing, routing and fleet structures of United States airlines while at the same time retaining current domestic ownership and labor protection (Hansson, 2002). Talks between the Europeans and Americans were aimed at accomplishing a final agreement by the end of 2006. However, the Americans decided to postpone the review of restrictions on foreign ownership. Still, both parties were hopeful that they would be able to reach an early final agreement, and roll it out in the summer of 2007. However, an agreement was only reached in March 2008 and final settlement was anticipated by 2010.

2.4.1 Traffic Stimulation Consistent with the fare reducing effects, the literature tends to uniformly demonstrate that air service liberalization has a positive impact on stimulating passenger traffic. There are differences in the extent to which travel may be stimulated, depending on a number of factors, such as geographical location, existing traffic, market structure or the use of different methodologies (e.g., different estimation techniques and the use of cross-sectional or time series data). The time series studies tend to focus on increased rate of traffic growth, while cross-sectional studies focus on snapshots of differences between liberalized and non-liberalized routes. In any event, studies found an increase in traffic in each market analyzed.

2.4.2 Case of Liberalization on U.S. and EU Routes In 1992, Dresner and Windle examined the impact of the U.S bilateral policy on passenger travel. They found that country pairs characterized by more liberal air service agreements experienced 46% higher passenger levels than did those with non-liberal agreements (Dresner and Windle, 1992). In 2002, Schipper estimated that in country pairs that are fully liberalized, airlines operated 36% more frequencies for the period 1988 to 1992. These results suggested that the increase in frequency could be accommodated by an increase in load factor (if aircraft size is constant) (Schipper, 2002). In 2007, Booz Allen Hamilton assessed the potential economic impacts of an open aviation area between the EU and the U.S. Their study showed that removing restrictions on international air services across the North Atlantic would lead to an increase of 26 million passengers over five years, equivalent to 34% more than without liberalization (Hamilton, 2007).

2.4.3 Case of Liberalization on Other International Routes In 2008, Piermartini and Rousova assessed the impacts of air transport liberalization on passenger flows. Based on a sample of scheduled international passenger traffic across 184 countries (approximately 80% of global international passenger traffic) in 2005, they found a significant positive correlation between the degree of liberalization and the volume of passenger traffic. Warnock-Smith and Morell estimated how traffic growth in tourism-dependent economies would be affected by air transport liberalization. Their regression analysis revealed a significant positive correlation between air policy reform and traffic growth; thus, a more liberalized air policy reform would lead to an increase in air passenger traffic (Warnock and Morell, 2008). In 2012, Cristea, Hummels and Roberson found that passenger traffic in countries that had signed open skies agreements rose 18% after five years. They also found that the introduction of new routes accounts for over one-third of the increased traffic growth in Open Skies Agreement signatory countries. In 2013, Piermartini and Rousova expanded on their earlier work on passenger flows and focused on four aspects of liberalization: (1) multiple designation provisions; (2) free determination of capacity; (3) free pricing and community of interest; and (4) cabotage. They estimated that worldwide adoption of free determination of capacity and free pricing would lead to a 5% and 9% increase in traffic volumes, respectively. Granting cabotage rights to all country pairs was estimated to increase passenger traffic by 10 percent.

2.4.4. Service Liberalizations in Aviation Industry Recent studies, by (Doganis and Rigas, 2001), indicate that states regard their national carriers and transport rights as strategic and national resources, as part of their sovereignty, and as part of their de facto and de jure control over all land, sea and air space within defined territorial boundaries. Further, a large number of airlines are still state-owned, or state-supported, and consequently Governments have resorted to imposing various degrees of protectionism to defend their airlines. Extensive research by (Alamdari and Morrell, 1998), attests to the importance of commercial aviation to nations in all states of development. Air service liberalization, which replaces a set of strict and arcane rules with the primacy of the market, has repeatedly proven a decisive influence in expanding the industry, and making its benefits available to more people. The past two decades have seen significant and beneficial changes in airline regulation. The United States began pursuing open skies agreements in 1979, and by 1982, it had signed 23 bilateral air service agreements worldwide, mainly with smaller nations. That was followed in the 1990s by agreements with some individual European States. The creation of a single European market for air transport services between 1987 and 1997 contributed to a surge in air transport within Europe. It is expected that the Arab market, which ranks among the fastest growing in the world, will benefit enormously from easing restrictions on air transport (Brueckner, 2000). As early as in the 1944 Chicago Convention, there had been proposals to liberalize the international aviation market. It took the industry half a century before the first Open Skies agreement got approved by the US-Netherlands governments in 1992. Although many Open Skies agreements have been reached in the following years, liberalization remains a formidable challenge. In addition, many of these liberalizations have been partial and incomplete, which needs further deregulations on ownership control and beyond rights etc. Many difficulties in liberalization can be ascribed to stakeholders’ different expectations on the effects of alternative policy / agreement scenarios. The resulting uncertainty has prevented many governments from adopting substantial regulatory changes. This study examines the effects of past liberalization policies on economic growth, passenger traffic and low cost carriers. Our main conclusions are as follows: o Liberalization has led to substantial economic and traffic growth. Such positive effects are mainly due to 1) increased competition in the aviation market, which reduces price and stimulates traffic growth; 2) productive efficiency gains as a result of carriers’ optimization of their network operations and pricing strategy. In addition, the increased competitive pressure forces airlines to improve productivity, and eliminates inefficient carriers out of the market; 3) positive externalities to the overall economy including employment opportunities, trade promotion, better transport and logistics services etc. These impacts are not uniform across countries. However, there has been an increasing number of countries adopted (progressive) liberalizations. This suggests that countries involved have benefited from liberalization in general. Liberalization allowed carriers to optimize their networks to cover intra / inter- continental markets. Hub-and-spoke networks have been extensively used by airlines to achieve cost advantages in production (economies of density) and / or revenue advantage. If ownership / citizenship restrictions are relaxed, market consolidation via merger and acquisition would allow airlines to strengthen their networks and market position. Strategic alliances allowed airlines to achieve “second best” network connection in markets where BSAs are still restrictive. Upon liberalization, the future growth of global airline alliance would be limited. Liberalization and network competition in international markets imply shift in traffic spatial pattern and market power. Therefore, it is important for countries to maintain their leadership in liberalization, thus that to keep their aviation sector competitive in the global markets. The prosperity of low cost carriers has brought significant impacts to the airline industry. There is a two-way relationship between LCC expansion vs. liberalization (and deregulation). The fast growth of LCCs leads to increased competition and reduced fare, which stimulate traffic substantially. These changes call for the removal of restrictions on capacity, frequency and pricing. In liberalized markets such as the EU single aviation market, LCCs have benefited most from the liberalization of beyond rights by establishing airport bases across borders. In addition, development of LCCs in domestic market can promote liberalization policy by increasing the competitiveness of a nation’s aviation industry. On the other hand, existing regulations on route entry, ownership and effective citizen control have constrained the expansion of LCCs, and thereby, prevented the associated benefits to be fully realized. The possibility of creating “destructive” or “excessive” competition had often been used as an excuse for regulation. Our investigation revealed that such negative effects were not material. Protection and regulation did not lead the airline industry to efficiency and profitability as hoped by policy makers. Instead, countries leading deregulation and liberalization scored various benefits for their aviation industry as well as the overall economy. Therefore, it is important for first-mover countries to maintain their leadership in liberalization, and it is urgent for countries still practicing tight regulation to catch up the wave of liberalization. The research on airfares and traffic flows shows that liberalization of air services generates significant additional opportunities for air transport users. Subsequent to liberalization, studies shows that airfares fall 10% to 40% while traffic increases as much as 75%. Removing restrictions on pricing and capacity appear to have the most sizeable effects. Allowing for foreign competition on domestic point-to-point routes (sabotage) is expected to confer significant consumer benefits, although it may have a negative impact on producer surplus. The literature does not reconcile the difference in magnitudes across studies. However, examining the methodologies used by these studies, we infer that as time progressed, liberalization had the general effect of lowering of fares and growing traffic in all markets (non-liberalized markets have to compete with liberalized destinations). As a result, while liberalization still has the effect of reducing fares and increasing traffic, the difference between liberalized and non-liberalized markets is now smaller, although still meaningful and significant. The literature review also shows considerable evidence of wider economic benefits provided by air service liberalization. Those wider economic benefits (sometimes called catalytic impacts) are driven by the increased connectivity enabled by further liberalization. In Asia, India, the EU and the U.S., the liberalization of air service has increased production and benefits in other sectors such as tourism, international trade, and overall economic growth. The literature also shows that the emergence of the Gulf carriers has stimulated traffic and generated consumer benefits in the regional markets they serve. Finally, few papers have identified limited impacts. One example often cited is that the outbound tourism may offset the benefit of increased inbound tourism. However, the impacts advanced in these papers are based on theoretical rather than empirical analysis.

2.5 Social and Economic Impacts of Air Transportation

Air transport is one of the world’s most important industries. Its development and its technical and service achievements make it one of the greatest contributors to the advancement for modern society. Demand for air service increases the influence of air transport on the global economy, making possible the rapid movements of millions of people and billions of dollars’ worth of goods to markets around the world. The demand for air transport has increased steadily over the years. In 2004, the air transport industry carried 1890 million scheduled passengers and 38 million tons of freight (ICAO Annual Report of the Council, 2004). Its rapid growth has been driven by a numbers of factors, including: - Rising GDP, disposable income, and living standards – increasing the demand for travel for both business and leisure purposes. - Reduced air travel costs – improvements in airline efficiency and increased competition have reduced world airfares by around 40% in real (ie., Inflation – adjust) terms since the mid-1970s. (World Air Cargo Forecast 2004/ 2005, 2004) - Globalization – the average distance travelled tends to increase as people take long holidays and do business in countries which now have more favorable political and social environments. - Deregulation – starting with the US domestic air market in the late 1970’s followed in the 1980s by the European Union (effectively completed in the late 1990s) with other regions deregulating gradually.

The industry plays a decisive role in the work and leisure of millions of people. It promotes an improved quality of life and helps to improve living standards. By facilitating providing employment opportunities, increasing revenues from taxes and fostering the conservation of protected areas.

2.5.1 Social Benefit of Air Transport

Aviation provides the only worldwide transportation network which makes it essential for global business and tourism. It plays a vital role in facilitating social and economic growth particularly developing countries. It provides significant social benefits. (International Civil Aviation Organization, 2014; ICAO Annual Report of the Council) - Air transport improves quality of life by broadening people’s leisure and cultural experiences. It provides a wide choice of holiday destinations around the world and an affordable means to visit distant friends and relatives.

- Air transportation helps to improve living standards and alleviate poverty for instance through tourism.

- Air transportation contributes to sustainable development. By facilitating tourism and trade, it generates economic growth, provide jobs, increase revenues from taxes and fosters the conservation of protected areas.

- The air transport network facilitates the delivery of emergency and humanitarian aid relief anywhere on earth, and ensures the swift delivery of medical supplies and organs for transformation.

- Air transport may provide the only transportation means in remote areas, thus promoting social inclusion.

2.5.2 Economic Benefits of Air Transport

The air transport industry has a substantial economic impact, both through its own activities and as an enable of other industries. Its contribution includes direct, indirect and induced impacts, which are related to the total revenues of the air transport industry.

(a) Direct benefits

These cover employment and activity within the air transport industry including airline and airport operation aircraft maintenance air traffic control and regulation, and catering facilities. Not all of these activities necessarily take place at an airport, with manufacturers selling aircraft and components to airlines and related businesses. Of these 5 million direct job generated by the air transport industry worldwide. 4.3 million people are employed by the airlines and airport (aviation sector) globally, contributing around US$ 275 billion of GDP to the global economy.

(b) Indirect benefits

These include employment and activities of suppliers to the air transport industry \, for example, jobs linked to aviation fuel suppliers; construction companies that build additional facilities: the manufacture of goods sold in airport retail outlets, and a wide variety of activities in the business services sector (call centers, IT, accountancy, etc.) 5.8 million indirect jobs are supported through purchases of goods and services by companies in the transport industry. Examples include jobs in the energy sector generated through the purchase industry; or the workers required to manufacture retail goods. The contribution of these indirect jobs to global GDP is US$ 375 billion.

(c) Induced benefits

These include spending by those directly or indirectly employed in the air transport sector that support jobs in industries such as retail outlets, companies producing consumer goods and arrange of service industries (e.g banks, restaurants, etc.), 2.7 million induced jobs are supported through employees in the air transport industry (whether direct or indirect) using their income to purchase goods and services for their own consumption. This includes jobs in retail and a range of service industries. The induced contribution to global GDP is US$ 175 billion (2004 estimation).

(d) Catalytic or Spin-off Benefits

The air transport industry’s most important economic contribution is through its impact on the performance of other industries and as a facilitator of their growth. It affects the performance of the world economy, improving the efficiency or other industries across the whole spectrum of economic activity – referred to as catalytic or “spin-off” benefits. (Nwaogbe R., Wokili. H, O. Victor, Asiegbu, 2013; An Analysis of the Impact of Air Transport Sector to Economic Development in Negeria) Transport facilitates world trade: air transport helps countries participate in the global market by increasing access to main markets and allowing globalization of production. Air transport also encourages countries to specialize in activities in which they have a comparative advantage and to trade with countries producing other goods and services. Air transport is indispensable for tourism: particularly for remote and island destinations. Tourism directly supports jobs in airlines and airports, and spending of visitors arriving by air creates a substantial number of jobs in the tourism industry. Air transport boosts productivity across the global economy: improved transport links expand the market in which companies operate. As a result, companies are better able to advantage. By opening up markets, air services expose companies to stiffer competition, encouraging them to become most efficient. Air transport to shorten delivery times as part of reliably and to reduce costs. Air transport is an enabler of investment both into and out of countries and regions: viable air transport links are one of the key considerations that influence where international companies choose to invest. Air transport can act as a spur to innovation: by encouraging effective networking and collaboration between companies located in different parts of the globe. A good transport infrastructure can also encourage greater spending on research and development by innovation to be spread over larger sales. Air transport provides consumer welfare benefits to individuals: in terms of the increased availability of travel connections and for local airport communities. These must be taken into account when considering environmental impacts on, for example, air quality, noise and congestion in the vicinity of airports.

2.6 Reviews on Previous Studies

Recent studies of Myanmar candidate by San Linn, Kyi Kyi Oo and Ei Mon Kha submitted a thesis about Development and Improvement of Airport Service after Liberalization in Aviation Industry of Myanmar with Case Studies like Customer Perspective at Yangon International Airport and Passenger satisfaction of Airline Business. These emphasized on exploring how customer evaluate the quality of service by Yangon International Airport and Airlines in Myanmar. Aung Soe Moe analyzed in Air Transportation services in the aviation industry on the thesis title of “A Study on Myanmar Civil Aviation”. This thesis examined the aviation industry has some difficulties in availability of qualified employees. Privatization process are slow and such development in international air transport is not good. Effective state aviation system has not been applied fully yet.

Government should encourage more on private participation in aviation sector via privatization process. Partial practice of clear separation between service provider and regulator is definitely required. A survey by Lwin Lwin Htut in her studies “ A Study On Development of Domestic Air Transport Development in Myanmar ( A Case Study on state own domestic airlines 2002-2003 to 2011-2012)” examined air transport of passengers, cargo, aircraft movement of the State owned national carrier Myanma Airways development process including weakness within a decade. Another survey conducted by Sandar Aung, who studied in “A Study on Airport Operations at Yangon International Airport” is made on ground operations and had tried to indicate the sufficiency of services provided by this airport and also to produce the need for quality services. Win Maung Thein also conducted his research “A Study on Aviation Operations and Safety Management in Myanmar” explore the safety standard of aviation operations in Myanmar air transport and assess the main causes of air accidents and the needs for enhancing airline personal qualification in aviation development of Myanmar. Thet Thet Latt, conducted a research “A Study on Public Private Partnership of Air Transportation in Myanmar”. The study analyzed the public private partnership arrangement in air transportation sector of Myanmar by implementing the Management Contract in case of Yangon International Airport and Build Operate Transfer Contract in case of Nay Pyi Taw International Airport. In this study, it was found that Private Pilot Partnership is the allocating of risk to transfer the private sector and YIA faces land risk and Nay Pyi Taw International Airport also faces with demand risk of international flights and passengers. “An Assessment On Training Program of Civil Aviation Training Institute in Myanmar (Case Study: Air Traffic Control Course & Pilot License Course)” by Aung Kyaw Soe analyzed the training courses provided by Civil Aviation Training Institute, whether these training program are effective to achieve more skills in related aviation fields for full effective support to Myanmar Civil Aviation Development.

CHAPTER III

HISTORY AND DEVELOPMENT OF AIRLINES IN MYANMAR

3.1 Overview on Myanmar Civil Aviation

MNA was founded in 1948 as UBA, Union of Burma Airways. It took to the skies soon after PAL and Cathay Pacific and before Garuda and Thai International. It was one of Asia’s foremost airlines in the first forty years of its existence. The first flight was with a 9-seat De Havilland DH.104 Dove. Initial services were domestic, serving 19 stations around Burma. In 1950, international flights were introduced to Bangkok, Calcutta and Chittagong. The airline was reformed as a board under the union of Burma Airways Acts of 1952, and new routes were introduced to Singapore, Kathmandu, Dhaka, Hong Kong and Jakarta. In 1972, the airline was again reorganized as "Burma Airways Corporation (BAC)". It was renamed as Myanma Airways in 1989. International services were suspended in August 1993. Under its various identities of UBA, MAC, BAC, Myanma Airways and soon Myanmar National Airlines, the airline has provided 66 years of uninterrupted service to Myanmar.

Myanmar’s airlines were concerned about the ASEAN Open Skies agreement, which came into effect at the start of 2015 and allows carriers from other ASEAN nations to fly to Yangon, Mandalay and Nay Pyi Taw. The ASEAN Open Skies policy has the potential to bring serious economic gains for Myanmar, according to a presentation from European officials from the ASEAN Air Transport Integration Project given earlier this month. The country’s airlines face a host of challenges, which include access to capital, finding skilled personnel and competition – from both domestic and international firms. The threat from foreign carriers is a key concern for Myanmar’s airline industry, which is less established and matures than most of its regional neighbors. (Gilmore, 2016) Figure 3.1 Air Transport Passengers carried in Myanmar over the past 46 years

3000000

2500000

2000000

1500000

1000000

500000

0 1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 Number of Passengers

Source: International Civil Aviation Organization, Civil Aviation Statistics of the World and ICAO Staff estimates

Figure 3.1 indicates the different amount of air transport passengers carried in Myanmar over the past 46 years. After independence till 1988 in Myanmar, there was only one airlines-service and as a state owned enterprise SOE, it was very stable due to cost. After 1988 revolution, it suddenly dropped till 1998, but during this period, the government encouraged for private sectors and initiated reform structures in civil aviation, the amount of passengers raised until 2002. Sanction from west countries effected after 2002 and after 2010 the index rise up again.

Changes in air Transport Passengers carried in Myanmar over the past 46 years is shown in Appendix A and B.

3.1.1 Development of Airlines in Myanmar Civil Aviation

Air transport has increased the opportunities for both leisure and business travellers to experience a host of geographies, cultures and markets. With 51 percent of international tourists travelling by air, the aviation sector is critical to the tourism industry, which in turn is an important source of economic growth for many countries, particularly developing ones. Globally, air transport supports 34.5 million jobs within tourism, contributing around US$762 billion per year to world GDP. The number of international airlines operating to Myanmar has increased over the years from 12 airlines in 2009 to 28 airlines in 2013. Of those 28, eight are low cost carriers. (Than, 2014) The total inbound and outbound international passengers in 2012 increased 32.9% on that of 2011 and the total inbound and outbound domestic passengers in 2012 increased 14.12% on that of 2011. Passenger traffic at the airport has been growing year on year with the annual growth rate of 20.12%. (Tun, 2013)

3.1.2 Myanmar Market Growth in 2016 - 2017

Myanmar is a rapidly evolving country. This is reflected in the growth of air services to, from and within the nation. According to OAG Schedules Analyser data, seat capacity at the country’s airports has more than doubled in just two years, from 2014 to 2016. Myanmar’s international gateway, Yangon International Airport, has accounted for roughly half of all scheduled seat capacity in the country for most of the last decade. anna.aero estimates that the airport handled around six million passengers last year.

Table 3.1.Annual Departing Seats in Myanmar 2007-2016 (in millions)

YEAR YANGON OTHER STATIONS 2007 1.34 1.47 2008 1.13 1.09 2009 1.08 0.91 2010 1.47 1.47 2011 1.61 1.12 2012 1.79 1.25 2013 2.53 1.66 2014 2.73 1.39 2015 3.37 3.35 2016 4.34 4.29 Source: OAG Schedules Analyser

According to OAG data Myanmar has 27 airports with scheduled services this summer. Yangon is by far the busiest airport ahead of Mandalay and Heho. While Yangon is the biggest city in the country, the capital has been at Nay Pyi Taw since 2005. The airport serving the capital is currently only the country’s fifth busiest and its only international services are to Bangkok and Kunming. Apart from Yangon and Nay Pyi Taw the only other airport offering international flights is Mandalay.

Table 3.2.Top 15 Airlines in Myanmar as of Summer 2017

Airline Departing Seats (in millions) Myanmar National Airlines 1.01

Air KBZ 0.57

Mann Yadanarpon Airlines 0.39

Golden Myanmar Airlines 0.28

Yangon Airways 0.28

FMI Air 0.23

Asian Wings Airways 0.20

Bangkok Airways 0.19

Thai AirAsia 0.18

Myanmar Airways International 0.16

APEX Airlines Myanmar 0.13

Emirates 0.13

Thai Airways 0.13

China Eastern Airlines 0.12

Nok Air 0.12

Source: OAG Schedules Analyser

Analysis of OAG schedule data for this summer indicates that of the country’s top 15 airlines (by seats) nine are based locally. Going forward it seems unlikely that the country can sustain as many as nine local airlines. But while Myanmar is developing rapidly there are clearly opportunities. Myanmar National Airlines, the biggest domestic carrier, is the state- owned designated flag carrier and currently operates a fleet of 17 aircraft; 11 ATR 72s, two E190s and four 737-800s. Of the six foreign carriers in the top 15, four are based in neighboring.

Table 3.3. International Weekly Routes from Myanmar Summer 2017

Number of Weekly flights from Destination Myanmar Bangkok (BKK) 93 Bangkok (DMK) 63 Singapore (SIN) 57 Kuala Lampur (KUL) 32 Kunming(KMG) 30 Chaing Mai (CNX) 19 Ho Chi Minh City (SGN) 14 Gaungzhou (CAN) 9 Seoul (ICN) 7 Phnom Penh (PNH) 7 Tokyo Narita (NRT) 7 Dubai (DXB) 7 Hanoi (HAN) 7 Hong Kong(HKG) 7 Source: OAGS Schedules Analyser for w/c August 2017

Thailand while the remaining two are China Eastern Airlines and Emirates. The Dubai-based carrier began daily non-stop flights last August with an onward connection to Hanoi in Vietnam. From 1 July this will change as Hanoi will get its own non-stop service. The Yangon route will then continue on to Phnom Penh in Cambodia. The country’s domestic air travel network is dominated by flights from Yangon to the other airports, with Mandalay and Heho being served regularly with at least 10 daily flights. There are at least seven daily departures between Mandalay and Heho. Domestic services vary in length from 97 kilometers to 951 kilometers (between Myitkyina and Yangon). Regarding international services the country’s two leading international destination airports both serve the same city, Bangkok in Thailand. Bangkok Suvarnabhumi is served with over 90 weekly flights from airports in Myanmar, while Bangkok Don Mueang welcomes 63 weekly flights, holding off Singapore which has 57 for second place. A total of 14 destinations are served with at least daily flights from Myanmar, with the remaining 11 international airports being located across Cambodia, China, Hong Kong, Japan, Malaysia, South Korea, Thailand, the UAE and Vietnam.

Figure 3.2 International weekly routes from Myanmar Summer 2017

100 93 90 80 70 63 57 60 50 40 32 30 30 19 20 14 9 7 7 7 7 7 7 10 0

No. of weekly routes

Source: OAGS Schedules Analyser for w/c August 2017

3.2 Air Transport Freight in Myanmar

In 2017, air transport freight for Myanmar was 5.5 million ton-km. Though Myanmar air transport freight fluctuated substantially in recent years, it tended to increase through 1998 - 2017 period ending at 5.5 million ton-km in 2017. (Myanmar Air trasport freight, 1960 - 2018) Around 1994, new airlines were established and as a consequence, the air cargo transportation peaked at 1996. And, in 1997, United States issued a prohibition on new investment in Myanmar by US individuals or entities. Thus, tt dropped into less than 2 million ton per kilometer due to sanctions against Myanmar imposed by United States. unstable political situations. After 2010 election, a new government was formed which was led by former President U Thein Sein. The government released the restrictions on liberalization. The air freight increased dramatically.

Table 3.4 Air transport freight on Myanmar Date Value Change % 2017 5.5 - 2016 5.1 8.32% 2015 3.4 49.60% 2014 3.9 -13.22% 2013 2.9 36.35% 2012 3.8 -25.28% 2011 3.5 8.48% 2010 2.1 71.19% 2009 2.6 -21.11% 2008 2.8 -7.63% 2007 2.9 -1.29% 2006 2.8 2.83% Source: www.knoema.com

Figure 3.3 Air Transport Freight in Myanmar (1970 – 2017)

Source: www.knoema.com

3.3. Domestic Airlines of Myanmar

There are 6 domestic airlines in Myanmar. Myanma Airways is state-owned Enterprise. At present, try to approach private-public partnership and integrating overall business functions. Myanma Airways free is cheap but schedule be delayed and cancelled often because of the fulfillment of some requirements. 1. Myanmar National Airlines (1948) 2. Air Mandalay (1994) 3. Yangon Airways (1996) 4. Air Bagan (2004) 5. Asian Wings Airways (2011) 6. Air KBZ (2011) 7. Golden Myanmar Airways (2012) 8. FMI Airways (2012) 9. Apex Airways (2014) 10. Man Yadanarpon Airways (2014) Initial services were domestic, serving 19 stations around Burma. In 1950, international flights were introduced to Bangkok, Calcutta and Chittagong. The airline was reformed as a board under the union of Burma Airways Acts of 1952, and new routes were introduced to Singapore, Kathmandu, Dhaka, Hong Kong and Jakarta. In 1972, the airline was again reorganized as "Burma Airways Corporation (BAC)". International services were suspended in August 1993.

The profile of each domestic airline is provided below.

1. Myanmar National Airlines (1948) Myanma Airways was founded by the government after independence on 15 September 1948, as the Union of Burma Airways (UBA). It initially operated domestic services only, but added limited international services to neighboring destinations in 1950. In 1993 the airline withdrew from its international routes. After a 23-year absence, it relaunched foreign services in 2016 with service to Singapore. The name was changed to Burma Airways in December 1972, and to Myanma Airways on 1 April 1989. International services of Myanma Airways have been made as a joint venture airline, Myanmar Airways International (MAI). Myanmar National Airlines is the majority shareholder of Joint Venture Company MAI, set up in 1993.In 2003, it was proposed to set up a Myanmar-based airline for chartered international passenger and cargo flights, which was planned to be called Air Myanmar. In June 2015, Myanmar National Airlines announced the resumption of international services to Singapore, Hong Kong and Bangkok. https://en.wikipedia.org/wiki/Myanmar_National_Airlines 2. Air Mandalay (1994) Air Mandalay was a regional airline operating domestic services and international charter flights to neighboring countries. Its main base was Yangon International Airport. In early April 2015, two newly leased Embraer ERJ 145 jets had joined its fleet. The airline was established on 6 October 1994 and started operations on 18 October that year with a flight from Yangon to Mandalay. It was the first domestic and regional Joint Venture Airline in Burma. It was established as a joint venture between Air Mandalay Holdings Singapore under Managing Director Michael Chang (51%) and Myanma Airways. Director of Flight Operations Captain Zaw Thein, Chief Pilot Captain James Keep. On 27 August 1995, Air Mandalay started its first international service from Yangon to Chiang Mai in Thailand. The airline ceased operations in September 4, 2018 amidst overcapacity in Myanmar's aviation market. (https://en.wikipedia.org/wiki/Air_Mandalay )

3. Yangon Airways (1996) Yangon Airways Ltd. is an airline based in Yangon, Myanmar, offering scheduled and chartered domestic flights out of its bases at Yangon International Airport. It was suspended from December 2010 but restarted operations starting from 16 October 2011. Yangon Airways was listed by the United States Department of Treasury Office of Foreign Assets Control (OFAC) on its Specially Designated Nationals and Blocked Persons (SDN) list. Under United States federal law, Americans are prohibited from doing business with individuals or entities listed as an SDN. Yangon Airways was designated by OFAC in 2008 after having been acquired by notorious drug traffickers of the United Wa State Army. It was established in a joint venture between Myanma Airways, the state owned flag carrier in Myanmar, and Krong-Sombat Company of Thailand. The airline bases its headquarters and maintenance station in Yangon. In October 1997, the current owner of the airline acquired the share of the Thai company, and then acquired the share of the Myanma Airways in 2005 and the airline became a fully privately owned airline in Myanmar. It is operating schedule and charter flight services from Yangon to 13 prime commercial and tourist destinations in Myanmar. During the past three years, Yangon Airways has been progressively gaining market share. (https://en.wikipedia.org/wiki/Yangon_Airways)

4. Air Bagan (2004) Air Bagan Limited was headquartered in Yangon, Myanmar. It operated domestic scheduled services to 15 towns and cities, as well as to Thailand. Its main bases were Yangon International Airport and Mandalay International Airport. It was established in June 2004 and started operations on 15 November 2004, owned by Htoo Trading Co. Ltd. Its first international service was flown from Yangon to Bangkok on 15 May 2007 ]and the second to Singapore from 7 September 2007.Air Bagan was listed as a Specially Designated National by the United States Department of the Treasury for its association with the Government of Myanmar, meaning U.S. citizens are generally prohibited from dealing with the airline by U.S. sanctions against the government of Myanmar. When Cyclone Nargis struck Lower Myanmar in May 2008, the Burmese government gave Air Bagan and its parent company, Htoo Trading Co. Ltd responsibility to reconstruct the badly devastated town of Bogale in the Ayeyarwaddy Delta. In August 2015 Air Bagan announced that it suspended all flights. All flights were then operated by its code-sharing partner Asian Wings Airlines which is the same owner. The airline ceased operations again and handed back its license to the authorities in August 2018. (https://en.wikipedia.org/wiki/Air_Bagan )

5. Asian Wings Airways (2011) Asian Wings Airways is an airline based in Myanmar. It began service on 27 January 2011. The airline currently offers regular flights to all major tourist destinations in Myanmar. Asian Wings Airways is owned and operated by Sun Far Travels and Tours Company, Limited. The Asian Wings Airways is owned by a Muslim household as the largest stake holder in the company. All Nippon Airways announced in 2013 that it would purchase a 49% stake in Asian Wings Airways for around 3 billion Japanese yen, the first foreign investment in a Myanmar-based airline since democratization, but in 2014 ANA declared that its board of directors had agreed to cancel the investment citing “intensified” competition in the aviation sector. (https://en.wikipedia.org/wiki/Asian_Wings_Airways)

6. Air KBZ (2011) Air KBZ is a privately owned domestic Myanmar airline based in Yangon. Air Kanbawza, known as AIR KBZ, was established in June 2010. The airline is owned by Kanbawza Bank and began operations with a Yangon-Bagan-Nyaung Oo-Mandalay- Heho-Yangon flight on 2 April 2011. In 2015 Air KBZ began codesharing international flights with its partner Myanmar Airways International, but on 2 December 2016 Air KBZ itself expanded internationally, launching its first scheduled service outside Myanmar with flights connecting Yangon and Chiang Mai in neighboring Thailand. (https://en.wikipedia.org/wiki/Air_KBZ)

7. Golden Myanmar Airways (2012) Golden Myanmar Airlines is an airline in Myanmar currently offering domestic flights. It was established in August 2012. It was formed by 15 investors including the chairmen of CB Bank and Myanmar Golden Star. The airline launched operations in January 2013 with one Airbus A320 and planned to add a new aircraft to its fleet every six months. The airline operated a single leased Airbus A320 from 2012 to 2016. A further leased Airbus A320 was operated from 2013 to 2014 until damaged beyond repair. On 14 April 2014 an Airbus A320 of Golden Myanmar Airlines was damaged beyond repair at Yangon International Airport when it impacted the rear fuselage of another aircraft while being towed. The airframe was preserved in 2016 at Bago, Myanmar and used as a restaurant. (https://en.wikipedia.org/wiki/Golden_Myanmar_Airlines)

8. FMI Airways (2012) FMI Air Charter was established on 9 September 2012, operating charter flights from Yangon Airport to Nay Pyi Taw. The airline was renamed in 2015 and launched services as FMI Air in May 2015. FMI Air operated daily flights (17 x week) between the commercial hub, Yangon International Airport and Nay Pyi Daw International Airport, scheduled flights to over 20 airports within Myanmar. It was a schedule service airline offering a Premium Service to both the growing corporate and leisure sectors which include complimentary access to lounges and concierge services. FMI Air has its own APP (FMI AIR) to assist international travelers. FMI Air was Myanmar's #3 airline in terms of fleet size with plans to grow its domestic network in 2017/18 as well operate internationally. FMI Air has recently been rated as Myanmar's preferred choice LEISURE AIRLINE because of its network customer experience. The airline ceased operations in August 2018 after struggling to find a business partner. (https://en.wikipedia.org/wiki/FMI_Air)

9. Apex Airways (2014) APEX Airways was a charter and scheduled airline based in Yangon, Myanmar. APEX provided scheduled air services to Myanmar's commercial city Yangon and to Tanintharyi Region with daily flights. It main base was Naypyidaw International Airport APEX Airline Public Company Limited (APEX Airlines) was incorporated on 27 November 2012 for the purpose of providing International and Domestic Air Transport Services and was awarded a provisional Air Operator’s Certificate (AOC) to commence its startup process. APEX Airlines was operational and started to serve passengers in March 2015. The airline ceased operations and handed back its license to the authorities in August 2018. (https://en.wikipedia.org/wiki/APEX_Airlines)

10. Man Yadanarpon Airways (2014) Mann Yadanarpon Airlines Company Limited is a privately owned domestic airline based in Mandalay, Myanmar. The airline began operations in February 2014. The airline also offers charter services and is planning to commence regional services to Thailand. Mann Yadanarpon Airlines, has continued to mark another milestone by successfully retaining its registration with IATA Operational Safety Audit (IOSA), a voluntary safety audit programme aligned with global best practices. The Registration will be valid from August 5, 2020. (https://en.wikipedia.org/wiki/Mann_Yadanarpon_Airlines)

As mention in the table 4.3, there are more Tier 2 airlines than Tier 1, suggesting consolidation would benefit the domestic network. An analysis is provided for each of the airlines detailed, together with MNA, segregating the carrier by tiers. Tier 1 represent airlines making a positive contribution to the development of the domestic air services network in terms of its fleet choices, ownership structure, distribution system and competitive positioning in the market. Tier 2 are making minimal positive contribution to domestic air services, in using conductive approach to marketing and operations.

Table 4.1 Tier 1 and Tier 2 Airlines in Myanmar

Tier 1 Airlines Tier 2 Airlines MNA: Air Bagan: • Need to overcome perception of • Significantly downsized. unreliability • Average age of fleet is 21 years – partly due to demands of with no aircraft on order. Ministers to requisition • Plus point: reportedly pioneers aircraft at short notice. of e-ticketing in Myanmar. • Applied for IOSA audit. Air KBZ: Air Mandalay: • Market leader in domestic market. • Average age of fleet is 21 years – firm • Owned by the largest order (July 2014) for 6 x MRJ90 private bank in Myanmar. aircraft (list price of circa US$40m) with purchase rights for an additional • Undergoing fleet renewal. four aircraft – deliveries start in 2018. • Potential tie-up with Myanmar • Reportedly have debts of circa Airlines International – offering US$25m – not clear how they will potential for domestic to finance purchase of the MRJ90 international transfer aircraft. opportunities. • MNA has/is withdrawing its shareholding in the airline. • Mann Yadanarpon: Asian Wings Airways: • Delivery of 2 new ATR72-600 • Own/lease A321 aircraft that may be aircraft. parked and unused at RGN – • Plans to codeshare with Air KBZ. potential drain on finances. • Foreign ownership. • Average age of turbo prop fleet is 15 years, with no aircraft on order. • Plus point: use of e-ticketing in Myanmar. FMI Air Charter: • Primarily operate charter services on behalf of MNA. • Operation of CRJ-200 a product differentiator within the Myanmar aviation market. Yangon Airways: • Average age of fleet is 14 years. • No aircraft orders. • Relatively poor image in market.

Source: Fleet: Ascend; routes operated: OAG

3.4 Comparison of Airline Structures

This chapter compares the airline structure in Myanmar with selected countries in South East Asia to gauge its relative size and positioning. The competitive environment in Myanmar is examined by identifying the main airlines operating in domestic and international markets and how their market shares have evolved. Competitor strengths and weaknesses are identified and the Myanmar domiciled airlines are compared with MNA in terms of size, reputation, location and distribution channels. MNA’s product and service is compared with other Myanmar- domiciled airlines in terms of quality, price and image. MNA is currently only competing in the domestic market and it will therefore need to establish its own specific and defendable position within the international market.

3.4.1 Aviation industry in Myanmar

The aviation industry in Myanmar is relatively immature compared with more established markets such as Malaysia, Thailand, Vietnam, Laos and Cambodia. The figure below details the structure of the airline industry within Myanmar and neighboring countries. The analysis clearly shows that Myanmar has too many domiciled operators, operating too many ageing aircraft. This situation makes Myanmar-based airlines weaker, particularly in competition with international airlines. 3.4.2 Competitive Environment

Myanmar has one of the most competitive airline environments in the world. Currently, twelve Myanmar-based airlines, including MNA, compete in domestic and international markets. A further 24 foreign airlines serve Myanmar, 18 of which are full- service carriers and six low cost carriers. These airlines can be segmented into four categories as shown in the figure below.

Domestic and International Airlines in Myanmar

Myanmar-based Myanmar-based Foreign Foreign competitors competitors competit competitors (International) (Domestic) ors (Low Cost) (Full Service) Myanmar Airways International Asian Wings Air Macau Jetstar Asia Airways Yangon Airways ANA Nok Air Air Mandalay Asiana Thai Smile Mann Yadanarpon Bangkok Tigerair Airways FMI Air Charter Biman Air Asia Bangladesh APEX Airlines China Airlines Thai Air Asia Saga China Eastern Golden Myanmar China Southern Air KBZ Dragonair Air Bagan Korean Air Malaysia Airlines Qatar Airways Singapore Airlines Silk Air Thai Airways Intl. Vietnam Airlines Air China

Air India

Source: MNA- The way forward business plan Note: Saga have received Airline Operating Certificates but have not commenced operations 3.4.3. Myanmar-based competitors on Domestic routes

The domestic market increased from 2.4m passengers in 2010 to 3.6m passengers in 2012 (+50%). In 2013, passenger numbers increased to 3.8m (+8%). The slowing of growth in 2013 was not matched by a reduction in seat capacity offered by airlines. Passenger load factors on domestic routes in 2013 are estimated to have averaged between 60% and 65%. Slowing demand and increased capacity will almost certainly lead to reduced air fares, diminishing the prospects of profitable operations for airlines in the domestic market. The situation is further exacerbated by the Myanmar DCA appearing to continue issuing new operating licenses to start-up airlines planning to operate in the domestic market. However, we understand that the DCA will be less willing to issue many more AOC certificates after the three that are currently in progress. In 2013, MNA achieved a 22.3% share of the domestic market based on seat capacity offered, positioning it as the second largest domestic airline. The other major domestic airlines in 2013 were: • Air KBZ – market leader with 25% seat capacity share • Asian Wings – 20% share • Air Bagan – 15% share • Air Mandalay – 12% share Golden Myanmar Airlines and MAI both play a minor role in the domestic market with seat capacity shares of 5% and 1% respectively. The main focus of these airlines is on international services and therefore they are profiled in the international routes section. A number of new airlines have either recently commenced domestic services or have received approval from the DCA to start services in the near future, including Mann Yadanarpon Airlines and FMI Air Charter. Airlines that have received approvals but are yet to commence service are Apex Airlines and Saga. The DCA has stipulated that new domestic airlines can no longer base their aircraft at Yangon, due to capacity constraints at the airport. Accordingly, Apex Airlines plan to base their operation at Nay Pyi Taw.

3.4.4 Suspension of Three Airlines

FMI, APEX Airways and Air Bagan were suspended in the last few years. A major problem of their suspension is the fact that ticket prices still remain expensive for most Myanmar citizens compared to train or bus. And foreigners are not that keen to travel extensively on Myanmar domestic airlines as they generally pay fares which are 100 to 200% more expensive than the ones sold to local passengers. According to data analysis from the Centre of Asia Pacific Aviation (CAPA), Myanmar’s domestic aviation market has grown by 150% this decade and still has huge potential. But they are only three million domestic passengers to be shared now by eight airlines. Consolidation seems unavoidable. FMI Airlines said to only suspend temporarily its activity and looks now for a foreign partner. AirAsia has been in talk with the carrier but announced earlier this year to suspend for now any talk to acquire an airline in the country. The low cost group might be back as consolidation of the sector will continue.

3.4.5 MNA’s Domestic market summary

After strong growth in passenger numbers between 2010 and 2012, the market slowed in 2013. However, seat capacity continued to grow in 2013 and 2014, with new entrant airlines due to commence services in the near future. This over-capacity almost certainly means that none of the Myanmar-based airlines offering domestic services were profitable in 2013 and this situation is unlikely to change in 2014. The owners of Myanmar’s airlines, which include banks and large companies, are not only able to bear these losses but are also committing to further fleet renewal and expansion. The reasonable response to the over-capacity situation would be consolidation, either through mergers or exits. However, most of Myanmar’s airlines are seeking to expand and increase their market share. The government has further exacerbated the situation by certificating new airlines to enter the domestic market, which is already saturated. There is a general lack of service and product differentiation in the domestic market, with most airlines offering almost identical fleets, route networks and pricing. Air KBZ’s on-board product and service is considered to be the best. MNA plans to upgrade its cabin service to match and eventually exceed the competition. The introduction of the new ATR72-600 aircraft will further accelerate planned improvements. Based on available seat capacity, MNA is the second largest airline operating domestic services. The airline, along with almost all of its competitors is based at Yangon airport. MNA has made limited progress towards upgrading its distribution channels, whereas some domestic airlines have introduced e-ticketing. MNA’s service is differentiated by the operation of the ERJ190 aircraft, but suffers from a perception of unreliability, partly due to demands of Ministers to requisition their aircraft at short notice.

Figure 3.4 Myanmar Domestic Airline Share

3.4.6 International routes by MNA

Myanmar’s international market more than doubled in size from 1.2m passengers in 2010 to 2.7 million in passengers in 2013. Annual passenger numbers increased by 32% in both 2012 and 2013. Foreign airlines accounted for almost all of the growth as Myanmar-based carriers handled only 391,000 international passengers in 2013, with their share of the international market dropping from 19% in 2012 to 15% in 2013. International routes to/ from Myanmar are served by three distinct market segments: 1. Myanmar-based airlines offering point to point services with limited connectivity to/from domestic routes. 2. International full-service airlines that channel point to point traffic from their source market, together with connecting traffic from further afield through their hub. 3. Low cost airlines operating primarily point to point services.

3.4.7 International Market Summary Low cost airlines will mainly compete with MNA on the point-to-point traffic segment. If and when these airlines are permitted to launch international services from Myanmar’s regional airports they will compete directly with MNA hub and spoke transfer product at Yangon. The international market to Myanmar has seen strong growth in passenger numbers between 2010 and 2013, with this trend likely to continue in 2014 on the back of strong interest in Myanmar as a tourist destination. MAI and Golden Myanmar Airlines have both struggled to maintain market share on the routes where they operate and will almost certainly have seen their revenue yields diluted as a result of fierce competition. Both Myanmar-based airlines also face the challenge of raising their brand awareness in the markets they serve. This is particularly important given that for all routes it is the inbound market to Myanmar that is driving growth. The international market may eventually suffer the same problem as the domestic network, where increasing capacity eventually outstrips demand.

Figure 3.5- Myanmar International Airlines Share

Source: OAG (2013), avia solutions analysis

• Myanmar-based airlines MAI achieved market share of just 9.83% and Golden Myanmar Airlines suspended its international services in 2016. • International full-service airlines achieved a total market share of 60%. • Low cost airlines achieved a 25% seat share.

3.5 Myanmar Air Travel Demand

3.5.1 Independent Traffic Forecasts The Tourism Master Plan 2013-2020 was published by The Ministry of Hotels and Tourism in conjunction with the Asian Development Bank. The research provides three scenarios for growth in tourism arrivals over the period 2015- 17 of 13%, 15% and 20% per annum in the conservative, mid and high cases respectively. Initial growth from 2013 to 2015 is 13%, 20% and 42% respectively. Note, this forecast is for all modes of entry to Myanmar and does not explicitly apply to air transport in isolation. The High Case reflects the impact of a relaxation of visa requirements for cross- border surface travel. This process began in Q4 2013 and early indications are that there has been a significant increase in cross-border land traffic from Thailand – some of whom enter Myanmar to use international air services from Yangon. The IATA Global Traffic Forecast is produced in Q3 each year by the industry body. The high-level forecast is based on a Delphi technique or consensus synthesized from a survey of IATA’s member airlines and nations. By definition it therefore does not include all airlines’ views – for example MNA is not a member of IATA. IATA has not produced a domestic forecast for Myanmar; possibly because no clear trend is exhibited or Myanmar’s domestic airlines are not members of IATA – and with international traffic forecast to increase by CAGR 4.9% between 2013-2017, it is the most conservative of the forecasts reviewed for international traffic.

3.5.2 Top-Down Traffic Forecast

Table 3.6 Myanmar Passenger Growth Vs GDP Annual Growth Rate (CAGR) Span Compound GDP International Domestic 2004 - 2012 8.3% 14.7% 2.8% 2008 - 2012 6.1% 18.3% 8.0% 2013 - 2017 6.9% 16.7% 15.8% Source: DCA, OEF, World Bank *Unverified Provisional data for 2013 600

As noted earlier, growth in air passenger traffic is closely correlated with economic activity, both in cause (tourism and direct foreign investment) and effect (greater GDP per capita), with the relative elasticity of growth in traffic to GDP changing as the market matures. This relationship can usefully form the basis of a top-level econometric forecast methodology, if sufficient data is available. Myanmar passenger traffic shows a correlation with GDP growth, particularly for international traffic in later years. However, caution is advised in selection of the data period, given the significant recent impact of political reform and relaxation of economic sanctions. Therefore data prior to 2008 was discarded for the purposes of regression analysis and correlation. Figure 3.6 Myanmar Passenger Growth vs GDP

Source: Avia solutions Analysis Figure 3.7 Approach to Economic Focus of MNA

Source: MNA- The way forward business plan

3.5.3 MNA Organization Structure and Summary of Vision, Mission & Values

Myanma National Airlines is composed of eight departments – operation department, engineering department, commercial department, account department, administrative department, aircraft ground handling department, medical department and ground school. Combined, the essential elements of vision, mission and values, describe why the company exists, who it is, what it intends to do, and how it intends to do it. These elements provide insight, offer motivation, and point the way forward to grow and achieve its goals.

Vision:

To be the leading airline in Myanmar, proudly connecting our land to the world through exceptional Myanmar hospitality.

Mission:

To deliver shareholder value by growing a profitable airline with a passion for excellent customer service, safe operations, innovation, growing our people, and the spirit of Myanmar, our home.

Values:

• Integrity

• Safety First

• Customer First

• Respect for People

• Learning & Innovation

• Protect Our Planet

Strategy:

As the boutique airline of Myanmar, we will provide our guests a service experience that reflects the best of our culture, and the easiest connections at our Yangon hub.

Figure 3.8 .Organization Chart of MNA 1. General and Administrative Personnel 2. Internal Audit 3. Operation Department 4. Engineering Department 5. Ground Handling Department 6. Commercial Department Managing 7. Account Department 8. Administration Department Director 9. Law Research & Development Department 10. Civil Aviation Medical Department Total

GM - GM - Management Operations

Admin Commercial Operations Engineering

Ground Accounts Handling

Law, Research Medical Dept

Source: MNA- The way forward Business Plan 2017

3.6 The Nature of Domestic Airline Business in Myanmar: On-Board Services

The airline business has become more competitive and most airlines, in considering their competitive edge, take into account the quality of service to be offered to customers. Typically, a service package includes ‘tangibles’ which refer to goods provided for customers and ‘intangibles’ which are those related to the quality of service offered to the customers. The in-flight service-package includes both tangibles and intangibles. The problem to be addressed is the need to ensure that all the flights are fully stocked with the physical items in the service package, together with hygienic and functional equipment requested by cabin crew for providing service. These goods fall into four categories: 1. Food items, including beverages to be consumed on board. 2. Non-food items, comprising an extensive list which may include newspapers, blankets, toilet bags, headsets for aircraft audio-visual systems. 3. Duty-free goods for passengers to purchase on the aircraft. 4. Equipment required by cabin crew for providing service. The service equipment includes tea and coffee-making equipment, first aid kits, etc.

Nevertheless, the quality of a service package not only depends on food, drinks and facilities on the aircraft such as newspapers, blankets, toilet bags, headsets, etc. , but it also depends on the skills and knowledge of cabin crew who serve passengers to create positive attitudes toward the airline and to enhance the brand loyalty. In conclusion, the aviation industry in Myanmar is competitive. Low-cost airlines in domestic market have increasingly become more popular because of the developing country. To compete with those budget airlines, MA needs to find ways to retain and attract passengers.

3.6.1 Ground Handling Services in Myanma Airways

Handling baggage in the sorting area, sorting it, preparing it for departure, loading it onto and unloading it from the devices designed to move it from the aircraft to the sorting area and vice versa, as well as transporting baggage from the sorting area to the reclaim area. The physical handling of freight and mail whether incoming, outgoing or being transferred, between the air terminal and the aircraft. Marshaling the aircraft on the ground at arrival and departure; assistance to aircraft parking and provision of suitable devices; communication between the aircraft and the airside supplier of services; (provided that these services are not provided by the air traffic service) the loading and unloading of the aircraft, including the provision and operation of suitable means, as well as the transport of crew and passengers between the aircraft and the terminal, and baggage transport between the aircraft and the terminal; the provision and operation of appropriate units for engine starting; the moving of the aircraft at arrival and departure, as well as the provision and operation of suitable devices; the transport, loading on to and unloading from the aircraft of food and beverages. The organization and execution of fuelling and refueling operations, including the storage of fuel and the control of the quality and quality of fuel deliveries and the replenishing of oil and other fluids are also included in ground handling services of MA.

Table 3.7 Ground Handling Services of MNA (1996-2012) Sr. Ground Handling Services of MA Responsibility No. 1 Representation and liaison services Liaison with outsiders 2 Load control, messages and Baggage, mail and communication telecommunications 3 Passengers and baggage handling Sorting and transporting to loading area 4 Freight and mail handling Physical handling of mail, between air terminal and aircraft 5 Ramp handling Marshaling and parking 6 Aircraft services Cleaning, Cooling and heating in the cabin 7 Fuel and oil handling Replenishing of oil and other fuels 8 Aircraft maintenance Provision, administration of spare parts 9 Flight operation and crew Inflight assistance, post flight activities administration 10 Surface transport Crew, passenger, baggage, freight and mail transport 11 Catering services Storage of food and beverages 12 Ground administration and supervision Overall management in ground 13 Airport security Overall safety affairs Source: Head office of Myanma Airways The ground handling activities of Myanmar Airways in accordance with the standards and recommended practices contained in the IATA Airport Handling Manual. The ground handling services of MA can be seen as above table.

Among eleven airlines except Eva Airlines, Korea Airlines and Qatar Airways were used the ground handling services of MA since 1996. These three Airlines were started ground handling services on mid-2012. Non-schedule category consists of unplanned Airlines such as emergency transportations, special guest trip at national level and so on. MNA is providing ground handling services with the following airlines; Table 3.8 MNA Providing Ground Handling Services with Various Airlines Sr.No Various Airlines 1 Air China 2 China Airlines 3 China Southern Airlines 4 Vietnam Airline 5 China Eastern Airlines 6 India Airlines 7 Thai Air Asia 8 Eva Airlines 9 Korea Airlines 10 Qatar Airways 11 Non-schedule Source: Head office of Myanma Airways

The following table shows the income from ground handling services (1996-2012) of Myanma Airways: Table 3.9 Income from Ground Handling Services of MA (1996-2017) Income(USD Change % Sr. Years Millions) 1 1996 – 1997 2.28

2 1997 – 1998 2.76 21.05 3 1998 – 1999 4.13 49.64 4 1999 – 2000 2.29 -44.55 5 2000 – 2001 1.47 -35.81 6 2001 – 2002 1.36 -7.48 7 2002 – 2003 2.31 69.85 8 2003 – 2004 3.40 47.19 9 2004 – 2005 3.01 -11.47 10 2005 – 2006 3.58 18.94 11 2006 – 2007 3.57 -0.28 12 2007 – 2008 4.45 24.65 13 2008 – 2009 1.39 -68.76 14 2009 – 2010 0.38 -72.66 15 2010 – 2011 2.46 54.74 16 2011 – 2012 3.05 23.98 17 2012 – 2013 3.5 14.19 18 2013 – 2014 6.6 89.43 19 2014 – 2015 6.9 5.05 20 2015 – 2016 8.3 19.82 21 2016 – 2017 8.2 -0.71 Source: Head office of Myanma Airways and MNA presentation at Pyithu Hluttaw Power Point

According to the table 3.7, income from ground handling services was 4.45 US$ Millions in 2007 – 2008. However, in 2008 – 2009, some of the business functions of MA were transferred to Air Bagan Limited and so MA’s income from ground handling services was decreased to 1.39US$ Millions.

3.7 Propensity to Fly

There is a strong correlation between GDP per capita growth and propensity to fly (PPTF) as measured by number of passengers divided by the national population. Myanmar has a very low GDP per capita at US$1,841 in 2013 and the PPTF is also low, but at a level consistent with other countries at a similar stage in their economic development. As the income of the population increases, as measured by GDP per capita, so the share of spending on air travel grows. The relationship between GDP per capita and PPTF is highly correlated at a national level (r2 = 0.88). Myanmar is at the early stages of economic development, and likely to experience rapid PPTF growth due to internal GDP per capita growth and strong demand from the inbound tourist market. OEF economic growth projections for Myanmar forecast that GDP per capita will increase by CAGR 7% to 2017, and based on the relationship illustrated in the figure shown in APPENDIX (D) suggests that passenger volumes could reach 6.5million - 8.0million by 2017.

3.8 Transfer Product The importance of transfer passengers to an airline should not be underestimated if the airline is to fully realize the development of its network. A strong transfer capability allows passengers using the airline to easily connect through the system providing access to the whole network in a seamless and time efficient manner. The benefits of a strong transfer capability include but are not limited to: Ease of access to the whole network: A strong transfer product allows passengers to easily and quickly access the whole airline network with minimal delay.

• Attraction of new passengers: Once established, a reputation for a good transfer product can attract new passengers to the airline away from its competition.

• Stimulating economic growth: There is clear evidence that a strong transfer capability of an airline can stimulate economic growth in the country. This is achieved by enabling inward visits and eventually investment by foreign business who are able to better access markets.

• Reduction in staff costs: A well designed transfer product can help reduce staffing costs through the reduction of duplicated processes.

3.8.1 An Idealized Transfer Process The figure shown in APPENDIX (E) is indicative of best practice at an airport handling both international and domestic passengers with a clear passenger transfer process. In this idealized process, arriving passengers (both domestic & international) are directed to the transfer facility where they are able to complete the necessary procedures (Health, Immigration, Customs & Security as may be required). From this point they are able to quickly access the departure concourse and connect through to their next destination. Importantly, passenger checked baggage is processed through the system such that transfer passengers do not have to collect and recheck their baggage (the exception to this is when an arriving international passenger has to clear customs at the point of arrival as opposed to the destination due to lack of facilities at the destination). Processes in the transfer facility include but are not limited to: • Boarding Card Check • Health Checks • Ticketing/Airline Transfer Desks • Immigration • Security • Customs 3.8.2 The MNA Transfer Product Figure 3.9 MNA Transfer Flows at Yangon

Source: MNA- The way forward business plan The figure opposite sets out the basic transfer flows associated with MNA at Yangon, given the relationship with non-MNA passenger traffic. An analysis of the flows between the domestic and international passengers of MNA and non-MNA airlines will need to be undertaken to identify the largest market to leverage with a transfer product. Supplementing this study will be an assessment of the total MNA and non-MNA network to identify potential transfer flows that will enable the full use of the MNA network via its transfer product. A clear understanding of the current transfer flow and its potential will enable the design of a transfer product that will be most advantageous to MNA. It is most likely that the key focus will be on international to domestic flows and vice versa for both MNA and non-MNA passengers as this generally yields the most benefit. (Appendix B) CHAPTER (IV) MNA’S SERVICE SECTOR DEVELOPMENT AFTER LIBERALIZATION IN MYANMAR AND ANALYSIS ON CUSTOMER SATISFACTION OF MNA

4.1 Survey Profile

Myanmar National Airlines (MNA) is Myanmar National Airlines is the national flag carrier of Myanmar and has the most extensive route network within our country. Our airline has been in existence for over 65 years and we are one of the oldest and most experienced airlines in Asia. Founded on 15 September 1948 by the government, Myanmar National Airlines used to be known as the Union of Burma Airway (UBA). However, its name was changed twice into Burma Airways in 1972 and into Myanmar Airways in 1989. 25 years later, it is rebranded into Myanmar National Airlines. It is the oldest airlines in Myanmar, and also the second oldest in Asia after Malaysia Airlines. Myanmar National Airlines operates the largest fleet, and is also known for serving the most routes throughout cities of Myanmar. The airlines fly to such countries as Hong Kong (Hong Kong International Airport), India (Gaya Airport), and Singapore (Singapore Changi Airport) and Thailand (Suvarnabhumi Airport and Chiang Mai International Airport). With premium service quality, Myanmar National Airline offers all range of customers from Business Class, Premium Economy and Economy, and it is currently the only airlines that offer Business Class in the country. Myanmar National Airlines operates flights to 26 destinations with a fleet of aircraft namely ATR 72-212, ATR 72-500, ATR 72-600, Beechcraft 1900, Boeing 737-800, Boeing 737 MAX 8, Cessna 208 Caravan and Embraer E-190.

4.2 Survey Design

In this chapter all the collected primary data of the questionnaire survey and Key Informant Interview (KII) were analyzed. The empirical data was collected in June on board Myanmar National Airlines during flights to Nay Pyi Daw, Thandwe and Myitkyina. And there were altogether 130 respondents that all returned the filled in questionnaire. The number of respondents who were asked to answer survey questions was 150 respondents. Respondents were concerned with this study were only from Airlines Passengers of MNA. A cluster sampling method was used to select the specific groups of airlines which were owner of Myanmar citizens. After that the collected data from passengers by survey with simple random sampling method and descriptive analysis has been used to analyze data.

4.3 Survey Findings and Summary

Part I describes the background information of respondents such as gender, nationality, age and education level. In Part II, information about MNA’s website usability and online reservation was accessed. Part III shows services provided by MNA and the ratings of customer satisfaction on services.

(i) Part I - Background Information

Demographic Characteristics of the Respondents

In this study, total of 130 passengers respondents were included to give some findings regarding the development of civil aviation airlines industry after the liberalization in Myanmar. The demographic characteristics of these respondents were presented in Table (4.1). 52% of respondents were male and 48% was female. There were 10 respondents (Under 18); 9 respondents (19-25 years old); 42 respondents (26-33 years old); 46 respondents (34-40 years old) and 14 respondents (41 and above). Thus, it can be noted the passengers who the ages between 34 to 40 were more blissful to take airplane trip than other age levels in this study. According to survey data, 69% of the respondents were Myanmar nationality and 31% were foreigner. 69% of the respondents were graduates, 15% were attending university, 8% were (still) attending high-school and 3% were at the basic primary school level of education.

Table 4.1. Demographic Summary of Respondents Value Percentage

(%) Male 68 52% Gender Female 62 48%

Nationality Local 90 69% Foreigner 40 31%

Under 18 10 8% 19 – 25 18 14% Age 26 – 33 42 32% 34 – 40 46 35% 41 and above 14 11%

Basic Education 4 3% Education High School 16 12% Level Attending University 20 15% Graduate 90 69%

Magazine/ Journals 6 5% Information Television/ Radio 10 8% Source about Internet 40 31% MNA Friends/ Family/ Relatives 70 54% Others 4 3%

Source: Survey Data 2019, July The majority of respondents amounting to 54% found out information about MNA from their friends, family and relatives. In addition, 20% knew about MNA from Internet websites. 8% of respondents knew from television and radio channels while 5% were from magazines and journals. In contrast, the lowest proportion of respondents was 2% and said they knew from other sources like telemarketing by travel agents.

(ii) Part II – MNA’s Website and Online Ticket Reservation

Part II questions are about the customer’s knowledge on online ticket reservation. As today is a digital era, most services are available through online. And it is important to make sure the current and potential customers can access the required information regarding MNA. Moreover, as the aviation industry is more and more competitive, providing services through websites is more and more critical for the success of companies and organizations. Thus, the innovative services like online ticket reservation should be integrated. The booking was an act of reserving accommodation, a ticket, etc. in advance. Other mean, booking was the arrangement that you make when you book something such as a hotel room, a table at a restaurant, a theatre seat, or a place on public transport (eg, Road, Water, Railway and Air Transport).

Table 4.2. Online Ticket Reservation

Male Female Total % Respondents who know how to book the 48 40 88 68% ticket online Respondents who don’t know how to book 20 22 42 32% the ticket online 86 62 130 100% Source: Survey Data 2019, July

There is a light difference in the number of respondents who know and who don’t know how to book the ticket online. 68% of respondents know while 32% don’t know the online ticket reservation service offered by MNA. The following data are retrieved from 88 people who have experience about using website and online reservation through MNA website.

Table 4.3.Devices used by respondents Male Female Total % Respondents who use smart phone 36 24 60 68% Respondents who use computer 6 12 18 21% Respondents who use other devices 6 4 10 11% 48 40 88 100% Source: Survey Data 2019, July

The highest proportion of respondents are using smart phones to make online ticket booking and done their reservation by themselves amounting to 68% of total respondents. Secondly, 21% of respondents like to use computer possibly because of wide screen. And, 11% of respondents are using other devices like tablets and ipads. The results show that the most people are now using MNA’s website to book the tickets themselves.

Table 4.4. Website Usability Male Female Total % The website is user-friendly 44 32 76 86% The website is not user-friendly 4 8 12 14% 48 40 88 100% Source: Survey Data 2019, July

The user-friendly and highly functional website plays an important role for customer satisfaction. Thus, every visitor who visits the website should get positive user experience. 86% of respondents said the website is user-friendly and easy to use while 14% said it is not. It shows the website still need to upgrade its design and performance to attract the visitors.

Table 4.5 Booking tickets online Male Female Total % Booking tickets online is better 20 12 32 36% Booking tickets offline is better 28 28 56 64% 48 40 88 100% Source: Survey Data 2019, July

The table indicates majority of people are still preferred to book the tickets through agents. The percentages of respondents who want to buy the tickets from agents are 64%. And 36% think it is better to book the tickets online. Due to some online payment constraints in Myanmar, most people are still reluctant to purchase the ticket or make payment online.

Table 4.6 Website’s resourcefulness Variable Male Female Total % The website is resourceful 30 20 50 57% The website is not resourceful 18 20 38 43% 48 40 88 100% Source: Survey Data 2019, July The customer could feel unsatisfied if he were not able to find the information required. The resourceful website is needed to prevent such issues. According to the table, 57% of passengers think the website is resourceful. 43% think they are not able to find the information required as the information provided on website is whether not sufficient or cannot be found at all.

(iii) Part III – Services and Customer Satisfaction Customer satisfaction is an important factor contributing to the success of business. It indicates the fulfillment that customers derive from service provided by the business. When customers get their needs effortlessly and in convenient way, it will make the customers to get satisfied with the service. The passengers rated the question for the question “MNA ground staffs are friendly, helpful and cooperative as table 4.23

Table 4.7 Supportiveness of ground staffs Strongly Disagree Neutral Agree Strongly Total Disagree Agree Male - 4 6 30 28 68 Female - 2 2 50 8 62 Total - 6 8 80 36 130 % - 5% 6% 61% 28% 100% Source: Survey Data 2019, July Note: This data is based on data by 65 respondents.

According to the table, 6% of passengers did not give their opinions clearly while 62% agreed that the staffs are supportive and friendly. People who think the staffs are not helpful is representing up to 5% while 28% of the people think the staffs are very helpful and pleasant. The passengers also gave their opinions regarding the check-in process at airport.

Table 4.8 Clear Information about Check-in process Strongly Disagree Neutral Agree Strongly Total Disagree Agree Male 4 2 12 30 20 68 Female 2 4 8 36 12 62 Total 6 6 20 66 32 130 % 5% 5% 15% 50% 25% 100% Source: Survey Data 2019, July The table shows 51 % of passengers think the information given is straightforward and easy to understand. The passengers who do not get the proper and detailed information about check-in process is made the same as 5% respectively. This may be because of language barriers as most of the information are displayed in English at the airport. However, 15% of passengers did not give their opinions clearly. 25% of passengers represent the information given is totally understandable and simple to follow.

When asking about the satisfaction of inflight services by MNA, the respondents shows their opinions as below:

Table 4.9 Satisfaction of inflight services Strongly Disagree Neutral Agree Strongly Total Disagree Agree Male - - 12 32 24 68 Female 2 4 24 20 12 62 Total 2 4 36 52 36 130 % 2% 3% 28% 40% 28% 100% Source: Survey Data 2019, July

The table illustrates that majority of MNA passengers are fully satisfied with our inflight services representing 40% and 28% respectively. However, 28% of passengers did not reveal their points of views clearly. 3% of passengers were not pleased with our inflight services. In addition, a small fraction amounting 2% of passengers do not like the services. Airline meal or in-flight meal is a meal served to passengers on board. These meals are prepared by airline catering services and normally served to passengers using an airline service trolley. These meals vary widely in quality and quantity across different airline companies and classes of travel. The types of food offered also vary widely and they range from a simple snack or beverage to a seven-course gourmet. MNA domestic airline meals are especially pastries and cookies along with hot drinks and beverages like cola. That’s because most of the domestic routes are shorter than 3 hours.

Table 4.10 Quality of Airline meal and Catering Strongly Disagree Neutral Agree Strongly Total Disagree Agree Male - - 6 36 26 68 Female - 2 6 30 24 62 Total - 2 12 66 50 130 % - 2% 9% 51% 38% 100% Source: Survey Data 2019, July

Representing 51% , which is the half of assessed passengers were totally agreed that the quality of inflight foods and drinks are very nice. Moreover, 38% thought the foods and drinks are superb. Yet, 9% neither agreed nor disagreed regarding the quality of the food while 2% did not like.

Table 4.11 Seats on board Strongly Disagree Neutral Agree Strongly Total Disagree Agree Male 6 2 16 32 12 68 Female 2 2 6 36 16 62 Total 8 4 22 68 28 130 % 6% 3% 17% 52% 22% 100% Source: Survey Data 2019, July

According to the table, the results shows that 52% of people thought the seats were spacious and comfortable. 22% agreed this in no exception while 17% did not give their opinions with clarity. 3% of passengers thought the seats are narrow while 6% of passengers didn’t enjoy the seats.

Table 4.28 On-time flight information and flight status Strongly Disagree Neutral Agree Strongly Total Disagree Agree Male 2 4 10 28 24 68 Female - 4 26 20 12 62 Total 2 8 36 48 36 130 % 2% 6% 28% 37% 27% 100% Source: Survey Data 2019, July The table represents 37% and 31% of respondents got the latest information regarding the flight changes. 28% had no idea about it. The information did not reach properly to 6% and 2% of respondents respectively. It represents the communication between customer and airlines still need to be improved. It is vital to disseminate the information on time regarding the flight schedule changes such as flight delays or flight cancellations. The airline usually communicate this such as providing information in the boarding gate areas, airport flight status display boards and flight status updates on social media and, for subscribed customers, voice, SMS and email alerts. Table 4.13 Special services Strongly Disagree Neutral Agree Strongly Total Disagree Agree Male - 2 32 24 10 68 Female - 4 36 10 12 62 Total - 6 68 34 22 130 % - 5% 52% 26% 17% 100% Source: Survey Data 2019, July

According to the table 52% of respondents did not have clear points of views on MNA’s special services like wheelchair assistance or seat selection for people with disabled persons. But, 26% of respondents thought the services are of high standards while 17% strongly supported the quality of MNA’s special services. However, a small proportion of respondents like 5% didn’t like those special services.

Table 4.14– Summary of Services and Customer Satisfaction Strongly Disagree Neutral Agree Strongly Disagree Agree Supportiveness of - 5% 6% 62% 28% ground staffs Clear Information 5% 5% 15% 50% 25% about Check-in process Satisfaction of 2% 3% 28% 40% 28% inflight services Quality of Airline - 2% 9% 51% 38% meal and catering Seats on board 6% 3% 17% 52% 22% On-time flight 2% 6% 28% 37% 31% information and flight status Special services - 5% 52% 26% 17%

In conclusion, it can be said that majority of passengers were satisfied with catering and airline meals of MNA. It may because of the high quality and freshness of foods deliver on board. On the other hand, there are 10% of passengers altogether who think the airline cannot deliver the clear information regarding the Check-in process. Thus, they stuck at the check-in counter for long duration which leads into unpleasant situations in the airport. Another finding is that 8% of passengers think the flight information and flight status is mostly static. Thus, effective delay management should be performed thoroughly to overcome these types of issues and there, also, should be enough information centers or customer service counters inside the airport which can deliver the timely information.

4.4 Development of MNA : MNA SWOT Analysis

The SWOT analysis performed on MNA aims to focus on the important factors that will affect the strategy of the airline rather than compiling an exhaustive list of the drivers affecting the company. Analysis is focused on the top 5 drivers within each category. Upon identification of the main drivers, the different dimensions were matched and converted into a Strategic Initiatives Matrix.

Table 4.1. SWOT Analysis

Strengths Weaknesses

Network heritage: Pre-existing domestic Weakness of enabling functions footprint A central position at the country’s main Operational costs structure international airport

A new and efficient fleet Structural challenges

Subsidiaries to spread risk, generate income Dependence on governmental and raise entry barriers funding

Government backing Brand value: an un-desired airline from an end-user perspective

Source: MNA The way forward business plan

Opportunities Threats

Geography: A topography that necessitates Macroeconomics threats: fuel price and air travel currency movement

Macroeconomics: capitalize on an External events increased propensity to fly both from neighboring countries and domestic travellers

A resources-rich country Changes in the regulatory landscape: one of the most competitive environments in the world

A first class tourism product Airport Infrastructure: a potential bottleneck

Seasonality: exacerbated exposure to one-off events during the high season

Source: MNA The way forward business plan

The degree to which the internal nature of the organization match with the external environment is labelled as the strategic fit.

4.4.1 STRENGTHS

Network Heritage: Pre-existing Domestic Footprint MNA has the most extensive network in Myanmar and is the only carrier with an articulate domestic and international strategy in the market. The network model provides some tangible competitive advantages. The better product that can be offered by network airlines (e.g. network connections, flexibility, product comfort, more convenient airports) will incur some additional costs; though can also be used to attract customers willing to pay a premium for the additional service levels. MNA plans to achieve an efficient differentiation from Asian LCCs as well as the other domestic operators, lowering costs but not at the expense of reducing the quality of service to target customers. The network model is the cornerstone of MNA’s strategy to address both the cost and revenue challenges of the airline.

A Central Position at Myanmar’s Main International Airport The position of the airline at Yangon International airport is a unique opportunity to provide an integrated service between the domestic and international networks. Connectivity will be one of the key differentiators of MNA’s strategy.

A New and Efficient Fleet MNA have one of the youngest aircraft fleets in the region. A brand new fleet of Boeing 737-800 and Max will also help to improve customer confidence. The rapid growth of MNA’s fleet help to drive up the penetration of the airline, providing the opportunity of MNA to become Myanmar’s leading international carrier.

Subsidiaries to Spread Risk, Generate Income and Raise Entry Barriers MNA is providing ground handling services to other airlines. Over recent years, this business proved to be the main source of MNA overall profitability. Its income should be diversified, minimizing exposure risk from both the income and expense sides.

Government Backing As the national carrier, MNA has a strong relationship with the government of Myanmar. The airline’s top management report directly to the Minister of Transportation and interact with MOT staff on a day to day basis. The Union of Myanmar is the major force behind the lease agreement for new aircrafts with GE Capital Aviation Services (GECAS).

4.4.2 WEEKNESSES

Weakness of Enabling Functions Many of the staff, jobs and functions that run an international airline operating smoothly are behind the scenes and cover a wide range of skills - including Human Resources, IT, Finance, Marketing, Legal etc. These functions are very low or even completely absent in the current organization of MNA. As a state-owned enterprise SOE operating on the domestic market, MNA will have to operate in-depth organization changes to fill the gaps on enabling functions. This weakness need to be overcome to operate international operations as well as fulfil some of the Legal matters associated with the leasing contracts, International Finance Reporting Standards (IFRS) compliance requirements. The implementation of a company resource planning to the sales operations will also be a key challenge in an organization as most of the current staffs are currently not using computers in their day to day activities.

Operational Costs Structure As a carrier new to international operations, MNA have to carry a heavier cost of operations per passenger transported compared to more established airlines with large international operations, such as ticket distribution or marketing and advertising. The skills gap between a typical international airline and the current MNA operations will also result in additional costs of operations mostly around the administration of sales outside the country. It is also important that the distributors on the domestic markets – travel agents - have strong bargaining power and currently charge heavy distribution fees to all domestic airlines.

Structural Challenges and Growing Complexity of Operations A large workforce structure makes managerial challenges and resistance to change. Organizational and operational change is one of the key challenges to MNA in future. As the airline grows and its business model develops to include a more structured pricing approach and distribution channels such as GDSs.

Dependence on Governmental Funding MNA faced burden of MA-60 fleet and the associated debt even in 2019. Additionally, over $120 million new debt will be added as part of purchasing the new ATR. MNA is currently relying on government funding for the expansion of its fleet and operations. The reliance on government funding shows challenging of budgetary constraints.

Brand Value: Customer Appeal of MNA Needs to be improved Brand loyalty is directly linked with brand value. An airline with a popular brand can more easily enter new markets and generate higher yield than a new airline to the international market. MNA is not yet a brand of customer appeal, and other airline brands serving Myanmar are more popular than MNA. Its has t compare to both full-service carriers in Asia and other domestic carriers in Myanmar until its brand appeal increases.

4.4.3 OPPORTUNITIES

Geography: A Region That Needs Aviation Unlike Europe, which is geographically compact, or the US which operates as a single market, South East Asia consists of nations with many topographical challenges. The region is well suited to air transport. For Myanmar, roughly 2500km long, with the second largest surface area in South East Asia, air transport is the only reasonable way of linking its population. It faces massive engineering challenges in creating essential infrastructure such as a road system over mountainous terrain especially in monsoons and erosion. For those who need to travel to Myanmar, flying is often the best solution.

Macroeconomics: Capitalize on an Increased Propensity to fly from Asia and Domestic Travelers The propensity to fly on the considered market should be positively influenced by the economic situation of the region as well as its demographic dynamics. Furthermore, Myanmar has a huge population of immigrant workers through the region. This segment of population has a higher propensity to fly relative to income. This is positive affect of inbound traffic with a large number of visiting friends and relatives (VFR) trips. It is also effect for air travel among business and leisure travelers.

A Resources-Rich Country As a resource-rich country, aviation development in Myanmar, both for passengers and cargo, relate to some of the benefits associated with the large developments planned in the country. The government will also satisfy a growing stream of this revenue.

A first class tourism product Myanmar has huge potential for tourism, as Asia and worldwide travelers become more sophisticated with such unique attractions as Myanmar.

Economic opening With Myanmar opening its political, business and commercial ties to the world, there is a once-in-a-lifetime opportunity for its airlines to participate and lead this growth.

4.4.4 THREATS

Macroeconomics Threats: Fuel Price and Currency Movement Jet fuel price is very high, specifically in the region where there is a shortage of refining capacity. As a part of MNA’s high costs, but no revenues, are all in US dollars, making Myanmar currency weak to a strengthen against US Dollars and the Asian currencies so that revenues will be generated through the international network. Moreover, the increase in fuel price is usually in the form of fuel surcharges and fare increases to the end customer, which make flying become less attractive. A high fuel cost not only increase airfares, but also lower passenger demand at a lower level for the future if the trend still the sane, especially in a market oriented towards leisure travel such as Myanmar.

External Events Air travel, regardless of the carrier, is weak to geopolitical events, pandemic diseases such as SARS and natural phenomena such as tsunamis (2008) or the volcanic ash disruptions experienced in Europe in 2010. MNA should focused geographic exposure and need mitigation to this exposure relative to airlines with a more global network.

Competition As part of the process of liberalization of the ASEAN market, MNA is facing a growing level of competition from LCCs and hub carriers on international routes from South-East Asia. MNA’s hub and spoke strategy will be challenged by the increasing availability of direct international services from airports in Myanmar other than Yangon, especially by low cost operators. MNA will also have to compete with Asia full service competitors such as Singapore Airlines, Thai Airways and Air China. Myanmar-based carriers such as MAI and KBZ are proving increasingly aggressive and could damage MNA‘s market share. These competitors have the fleet capacity and the market ability to compete MNA network development strategy.

Airport Infrastructure: The rapid growth in the aviation sector in Myanmar requires significant updating of outdated airport infrastructure. Myanmar’s government allows for domestic and foreign investors to participate in the development of airport infrastructure at selected airports. However, of Myanmar’s 61 airports, the majority are in Tier 2 and Tier 3 cities. These airports are too small to attract foreign traveler’s interest. A long-standing debate is taking place over how these airports will be modernized if traffic volumes cannot support investment.

Seasonality: Seasonality alerts for careful management of cash flows. As for the aviation industry in general and in the region especially, the Myanmar leisure market is concentrated only in November to April period. As a result, MNA’s earnings are highly seasonal, with its profits increasingly relying on a strong high season to balance a loss-making low season. This makes it weak to any unexpected.

4.4.5 Fleet Growth of Myanmar National Airlines

Table 4.16. Fleet Growth in MNA (2014-2017)

2014 2015 2016 2017 737-800 - 2 5 6 ATR 72 5 3 6 7 ATR 42 1 1 - - E190 2 2 2 2 Beech 1900D 2 - - - Grand Caravan 2 - - - EX Total (Fleet) 12 8 11 13 Source: MNA, AviaSolutions

In 2017, the total number of fleets by MNA was increased to 13 from 11 in 2016. Namely Beech 1900D and Grand Caravan EX, 4 fleets altogether run only in 2014. There was no difference in number of E190 from 2014 t0 2017 while ATR 42 run only in 2014 and 2015. There were 5 ATR 72 fleets in 2014 and it was decreased to 3 in 2015. Afterwards, the number was increased again up to 6 and 7 in 2016 and 2017 respectively. Figure 4.1 MNA Fleet Evolution 2014-2017

Source: MNA, AviaSolutions

4.4.6 Seat Capacity Growth of MNA (2014 – 2017)

Table 4.5 Seat Capacity Growth of MNA 2014 -2017 (seats in million)

2014 2015 2016 2017 CAGR Total (All 0.930 1.024 1.507 1.938 +27.7% Fleets) Source: MNA, AviaSolutions Analysis

Figure 4.6 MNA Seat Growth by aircraft 2014-2017 (seats in million)

CAGR 27.7%

2014 2015 2016 2017

Source: MNA, AviaSolutions Analysis The figure 4.6 shows that the High Growth in seats offered in 2017 from 1.507million in 2016 to 1.938m in 2017 from two E190s, with the extra capacity split between international and domestic operations (14% international and 86% domestic, reflecting the short sector lengths on local Myanmar flights).

Table 4.18 MNA Seat Growths by Market 2014-2017 (seats in million)

2014 2015 2016 2017 CAGR Total (Both 0.930 1.024 1.507 1.938 +27.7% Domestic and International) Source: MNA, AviaSolutions Analysis

The domestic capacity growth was slower than international – to reflect the market forecast expectation for faster growth of inbound leisure traffic versus a heavily congested domestic market. Domestic CAGR for 2014-2017 increased 27.7%.

Figure 4.3 MNA Seat Growths by Market 2014-2017 (in million seat)

CAGR +27.7% Domestic

International

2014 2015 2016 2017

Source: MNA, AviaSolutions Analysis

4.4.7 Annual Seat Capacity Development by 2015-2017

Table 4.19. Annual Seat Capacity (seats in million) Domestic International Total Change % 2015 844,766 209,177 1,053,943 59% 2016 1,093,782 586,789 1,680,571 16% 2017 1,127,746 828,446 1,956,192 - Source: Aviasolutions Analysis

The fleet modernization and expansion process will drive a significant increase in seat capacity for MNA, as well as an improved passenger in-flight experience, starting in January 2015. The first Boeing 737-800NG aircraft was to be delivered in July 2015. It is therefore international operations were launched in Q1 2015 with the E190 aircraft and additional frequencies and services were introduced as and when the Boeing 737-800 aircraft were delivered.

Figure 4.4 Annual Seat Capacity

Source: Aviasolutions Analysis

4.4.8 Network expansion of MNA 2015-2017

Table.4.20 MNA Domestic Network Expansion by seats 2015 – 2017

Total number of seats in thousand (E190 + B737-

800) Q1 12 Q2 15 2015 Q3 44 Q4 63 Q1 84 Q2 120 2016 Q3 126 Q4 150 Q1 190 Q2 208 2017 Q3 212 Q4 212 Source: Aviasolutions Analysis

The figure 4.9 shows the timeline (quarterly) for the development of capacity and aircraft deliveries. According to the Boeing aircraft delivery plan, the first aircraft was delivered at the end of June 2015. The network was designed to meet the existing capacity/demand requirements and increased gradually, to reach over 212,000 available seats by Q4 2017. The figure below shows the timeline (quarterly) for the development of capacity and aircraft deliveries.

Figure 4.5 Network Development of MNA ( 2015 – 2017)

Source: Aviasolutions Analysis

4.4.9 Domestic Network Capacity Changes 2014 – 2017

Table 4.21. MNA Domestic Network Capacity Changes 2014 vs. 2017 (seats in million) E190 ATR 72s Total Change %

2014 634.4 294.3 928.7 -4% 2015 376.7 512.7 889.4 16% 2016 376.7 651.4 1,028.1 13% 2017 376.7 739.3 1,116.0 - Source: Aviasolutions Analysis

In 2017, MNA’s domestic fleet was increased by 2 new ATR 72 aircraft, with one of the older ATR aircraft retired from service. The total fleet consisted of 7 ATR 72 aircraft and one E190 aircraft.

Figure 4.10: MNA Domestic Network Capacity Changes 2014 vs. 2017

Source: Aviasolutions Analysis

The overall seat capacity offered in 2017 increases by 9% versus 2016. - annual seat capacity on the E190 is the same in 2017 as in the previous two years at 376,000 seats. - annual seat capacity on the ATR fleet increases by 13% in 2017 versus 734,000 seats in 2016. In 2017, MNA offered 1,124,000 annual seats (an average of 21,628 seats per week). The majority of domestic seat capacity is offered on the ATR 72 fleet (66% share, 745,056 annual seats); the E190 has a 34% share and offers 379,600 annual seats).

4.4.9 Domestic Network in 2017

Figure 4.7 MNA Domestic Network Capacity Changes 2014 vs 2017

Source: Aviasolutions Analysis All flights operated on the retired ATR aircrafts were dropped. The overall seat capacity offered in 2017 decreased by 21% versus 2014 and by 28% versus 2016. The annual seat capacity on the ATR fleet is higher in 2017 compared with 2016, at 739 seats versus 651,000 seats in 2016. This increase is due to the introduction of new routes.

4.4.10 Passengers and Freight traffic by MNA Table 4.22. Passengers and Freight traffic by MNA (in thousands) Change % Passenger Freight (in Freight No Year Passengers (Passengers) Miles long ton) ton miles 1 2002 – 499.83 161.06 1.66 570 2003 -24.57 2 2003 – 377.04 120.23 1.68 547 2004 -16.27 3 2004 – 315.71 150.21 1.11 360 2005 -27.80 4 2005 – 227.95 76.35 1.03 367 2006 6.19 5 2006– 2007 242.07 80.57 0.75 282 6.41 6 2007 – 257.59 89.59 0.78 250 2008 3.09 7 2008 – 265.54 81.92 0.65 212 2009 -12.59 8 2009 – 232.12 71.88 0.69 215 2010 47.84 9 2010 – 343.17 105.57 0.69 220 2011 29.31 10 2011 – 443.75 136.14 0.69 210 2012 15.51 11 2012 – 512.59 151.27 1.12 338 2013 32.34 12 2013 – 678.34 173.40 1.15 341 2014 8.41 13 2014 – 735.36 184.37 1.10 350 -29.64 2015 14 2015 - 2016 517.37 162.43 0.91 420 0.58 14 2016 - 2017 520.39 - 180.78 1.16 410 Source: Myanmar Airways Aviation Reports It can be seen that the number of passengers were increased gradually within 15 years. Moreover, after 2010, as the tourism sector rose up and so that the number of passengers increased as above.

Table 4.12 Monthly Passenger Performances ( 2015 – 2018) 2015 - 2016 2016 - 2017 2017 - 2018 Jan 55,023 108,498 139,614 Feb 62,627 103,797 132,324 March 79,976 125,716 146,248 April 42,838 78,522 127,589 May 40,629 71,515 108,493 June 32,392 55,310 85,011 July 36,472 61,106 89,891 Aug 4,074 63,573 95,040 Sept 42,700 66,752 92,403 Oct 40,890 84,859 121,600 Nov 52,285 96,223 136,474 Dec 60,694 112,023 150,743 Total 550,600 1,027,894 1,425,430

Source: Myanma Airways Powerpoints presentation at Pyu Thu Hluttaw (2015 – 2018)

The table above shows the number of passengers who took MNA during 2015 – 2017/ 2018 period. According to Table 4.4 and Figure 4.12, in 2015 – 2016 period, the total number of passenger was 550,600 and in 2016 – 2017 was 1,027,897. As of 2017 – 2018, the number of passenger increased to 1,425,430.

4.4.11 MNA‘s Revenue, Profit and Loss

Table 4.13 Summary of Profit and Loss 2015-2017 MNA - KPIs & P&L 2015 2016 2017 Seat Capacity 1,053,944 1,680,571 1,956,191 Passengers 668,919 1,102,348 1,327,043 Load Factor 63.5% 65.6% 67.8% Revenue per Passenger $76 $125 $160

Passenger Revenues $50,385,574 $136,047,560 $209,387,858 Cargo Revenues $1,631,732 $2,756,633 $3,381,138 Ancillary Revenues $610,655 $1,677,083 $2,571,647 Subsidiary Businesses $10,217,530 $11,603,043 $13,900,162 Total Revenue $62,845,491 $152,084,319 $229,240,805

Direct Operating Costs $64,660,310 $140,953,206 $179,838,899 Selling, General & Admin Costs $11,343,980 $21,852,444 $30,428,197 Non-recurring Costs (Start-up etc.) $6,094,658 $0 $0 Subsidiary Business Costs $1,620,762 $1,748,983 $1,889,749 Total Operating Costs $83,719,710 $164,554,633 $212,156,845

Operating Profit -$20,874,219 -$12,470,313 $17,083,959 Operating Margin -33.2% -8.2% 7.5% Source: MNA – The way forward business plan According to the table above, the operating profit in 2017 was peaked at over 3 years.

Table 4.14 MNA Revenue in International Network (USD, in million) Q1 Q2 Q3 Q4 Total Change % 2015 0.1 3.2 8.1 9.7 21.1 319.91 2016 14.4 15.6 30.1 28.5 88.60 8.47 2017 32.3 31.1 15.5 17.2 96.10 - Source: Aviasolutions analysis

Domestic fares for 2015 are assumed at 90% of current fares charged by MNA, maintaining a conservative forecast in light of increased competition on domestic routes. However, there is scope for improvement on MNA’s fares, as they are currently well below the market average. International network revenues are modelled on a monthly basis, reflecting seasonality characteristics of Myanmar and international markets.

Figure 4.8 MNA Revenue in International Network (2015 – 2017)

Source: Aviasolutions analysis The figure above shows aggregated quarterly revenues for the fiscal years 2015-2017. Revenues in 2015 increased from $1.0 million in Q1 (when services are launched to Hong Kong, Shanghai Pudong and Taipei with the E190) to $9.7 million in Q4 (additional services to Singapore and Beijing with 737-800). In 2016, quarterly revenues increased from $14.4 million in Q1 to $28.5 million in Q4. Revenues were peaked in Q3 2017 ($52.8 million) with services to all 13 international destinations in operation.

Table 4.26 Summary of Profit/ Loss and Revenue 2015 -2017 Total Revenue Cost Profit Loss (USD, in (USD, in (USD, in (USD, in million) million) million) million) 2015 62.8 83.7 - 20.9 2016 152.1 164.6 - 12.5 2017 229.2 212.2 17.1 - Source: Aviasolutions Analysis

MNA was loss-making in 2015 and 2016, as the burden of implementation costs and low initial load factors prevail. It was that, in 2015, the airline lost $21 million (33% of revenue). In 2016, the loss was 8% of total revenues at -$12.5 million. In 2017, as international routes mature and load factors and yields improved, overall profits were $17.1 million, or 8% of revenues. Figure 4.14. Annual Profit and Loss Overall 2015-2017

Total Revenue Cost Profit

Source: Aviasolutions Analysis

The other businesses of MNA include Myanmar Helicopter International Co, Ltd and Myanmar MJets Business Aviation Center (MMBAC). Myanmar Helicopters International Co, Ltd was formed in 1997 as a joint venture company between Myanma Airways (MNA) and CHC Helicopter of Canada. It operates mostly offshore chartered flights to serve oil and gas platforms. MMBAC is a joint venture between MNA and MJETS, a leading corporate jet charter and aircraft management firm, based in Bangkok, Thailand.

Table 4.16 Revenue from Other Businesses of MNA Revenue (USD, in Cost (USD, in millions) Profit (USD, in millions) millions) 2015 1.1 0.0 1.1 2016 1.1 0.0 1.3 2017 1.5 0.0 1.5

Other Subsidiaries revenues were increased to $1.3million in 2016 and $1.5million in 2017, mostly driven by growth in the MMBAC joint agreement revenues, MCS royalty growth and modest growth in the Helicopters business. Operating costs for Other revenues are already accounted for in the subsidiary businesses and core airline costs as appropriate (Ground handling for MMBAC, overheads for room hire charges etc.).Therefore other revenues are considered to be a direct contribution to the airline’s bottom line, contributing a total of $3.9 million profit over the 3 year period.

Figure 4.15 Revenue from Other Businesses of MNA

Total Revenue Cost Profit $1.5m $1.5m

2015 2016 2017 Source: Aviasolutions Analysis

4.5 Summary of Customer Experience and Satisfaction– MNA

Airport management needs to know how they could identify some improvements and opportunities within airport service area in order to meet or exceed passenger satisfaction with their service performance. Customer satisfaction surveys are collected from population sampling in order to evaluate the service quality based on the customer’s points of view. With the key values of MNA, to deliver excellent customer service, safe operations and innovated ideas, it can be maintained to be a leading reputable airline connecting Myanmar to the world. According to the survey conducted in June and July, 2019, some of the key findings are highlighted and will be presented.

Table 4.30– Key findings of Customer Satisfaction and Recommendations MNA Services

Strongly Disagree Disagree Neutral Agree Strongly Agree

17% 27% 28% 27% 25% 22% 38%

26%

37% 40% 50% 52% 61% 51% 52% 28% 28% 15% 17% 9% 6% 5% 6% 3% 2% 5% 3% 5% On-time Clear Quality of flight Supportiv Satisfacti Informati Airline informati eness of on of Seats on Special on about meal and on and Ground inflight board services Check-in catering flight Staffs services Process status Strongly Agree 38% 27% 28% 27% 25% 22% 17% Agree 51% 37% 61% 40% 50% 52% 26% Neutral 9% 28% 6% 28% 15% 17% 52% Disagree 2% 6% 5% 3% 5% 3% 5% Strongly Disagree 0% 2% 0% 2% 5% 0% 0%

Source: Survey Data 2019, July

Majority of passengers are satisfied with the foods and drinks provided on board. Airline meals on MNA domestic flights are mostly bakery products due to short flying hours. Usually passengers are served the pastries and bakeries along with hot drinks and beverages. Nearly 50 passengers thinks MNA usually fail to deliver the message about flight status. . Mostly, flight delays are because of extreme weather and lateness of aircraft arrival. Passengers have to wait for long duration and the consequences may be over wait times. To overcome these issues, there should be information counters and/ public displays in local language in airport terminals. Furthermore, MNA can utilize the new technologies like building applications for mobile phones to provide such information. More than 60% of passengers agree with MNA grounds staffs’ cooperation and supportive manners. To drive improvements regarding the ground staffs’ customer service, there should be in-company trainings in topics like verbal and non-verbal communications skills, cross-cultural awareness and customer contact techniques. Furthermore, it is found out that a large proportion of passengers are satisfied with inflight services. In-flight service package of MNA includes both tangibles and intangibles like foods, duty-free goods and additional service equipments. Even in economy class, MNA provides not only comfortable seats, and complementary food and drink, but also streaming inflight entertainment too. Quality facilities like newspaper, blankets and toilet bags also includes. There are 10% of passengers altogether who think the airline cannot deliver the clear information regarding the Check-in process. Thus, they usually stuck at the check-in counter. Thus, effective delay management should be performed thoroughly to overcome these types of issues and there, also, should be enough information centers or customer service counters inside the airport which can deliver the timely information. As MNA’s aircrafts are mostly new, the seats on board are usually bright and clean. Basic amenities like reclining mechanism and seat belts are equipped and maintained well too. In some aircrafts, there are also advanced amenities like power ports and adjustable headrests. Regarding the special services, most passengers don’t have opinions. Passengers need to inquire in advance for special services like disability assistances and certain medical devices on board as soon as they make booking the flight. CHAPTER V CONCLUSION

5.1. Findings

Air Transport brings economic prosperity and social progress in a country. Safe and sound air transport system is seriously important to provide the socio-economic development of a country. After 1988 Myanmar has three International Airports and Yangon International Airport was upgraded and innovated by Department of Civil Aviation, this expansion and innovation leads to handle larger Jets such as “Boeing 747 and increase handling capacity from 2.7 million passengers a year to 3.8 million by 2013. The number and frequency of international flights is a reflection of growth of tourism industry in Myanmar. Thus, there is an increase in tourist’s arrival and tourist’s income. After 1988 there are nine domestic airlines and twenty-eight international airlines in Myanmar because of the private sector participation in Air transport Industry and also an expansion of domestic destinations and international destinations for Airports in Myanmar. Number of airports are increased and they also appeared joint venture airlines. Emergence of domestic airlines are a good prospect not only for government but also for the people. Previously people only relied on state-owned airlines but now they have choices to use their favorite airlines which can render the best service to them. Myanmar Airlines Industry has now been gradually upgraded to be able to expend operating routes and marketing networks. Myanmar has been doing all round development in air transport and transport facilities not only for regional and national development but also for being able to harmonize with the changing condition of the air transport in regional and global market especially in, at serializing the open sky policy or air liberalization in CLMV (Cambodia, Laos, Myanmar and Vietnam, Asian sub-grouping in Mekong sub-region) and ASEAN nations. Economic impacts of air transport liberalization are very wide and significant in Myanmar. On the supply side liberalization increases the number of air services available to passengers; the main advantages include higher frequencies new destinations an shorter layovers and may induce development of new business model such as the boom of low-cost carriers in the region. There are some difficulties to implement the sub regional air transport cooperation especially on the Myanmar side. Although Hub system plays a key role in modern days, Myanmar is not a hub for international airport. Moreover, providing airport service as an international airport is still weak. Besides there are low level of investment, lack of efficient institutions and infrastructure. Moreover, Myanmar’s present and future liberalization of air transport will promote the revenue of air transport and tourism industry of the country as well as the development of trade. It is also expected that Myanmar’s liberalization measures in air transport will invite more foreign investment for the development of Myanmar Economy. According to the conducted SWOT analysis, it came to the followings findings: • Pre-existing Domestic Footprint with the most extensive network in Myanmar. • Central Position at Myanmar’s Main International Airport. • Has new and efficient fleet. • Subsidiaries to Spread Risk, Generate Income and Raise Entry Barriers • Government backing • A region which needs air transport geographically • Capitalize on an Increased Propensity to fly from Asia and Domestic Travelers • First class tourism product • Economic opening to the world

5.2 Suggestion

Government should also focus more on the development of infrastructure or airport facilities and airlines. Only if the aviation facility develops in region-wise, aviation industry will be smooth and government’s objective of attaining balanced growth among states and divisions will be achieved and eventually national integration can be built up. Development of air transport will support the tourism sector development that who are taking part tourism industry will enjoy the benefit of it. Moreover it will also of great supply for the development of trade sector especially export cargos which are shipped by air. To be able to enjoy the development of air transport by all, air liberalization is not enough and interrelated with air transport sector. By doing the share of GDP by private sector will be increased and income of people will be going up. The service of the air transport is necessary for a country and its domestic and international linkages. Air transport is a strategic economic sector for every country. Low cost carriers are now taking market places in accordance to open skies policy and free competition, they have confident on their national carrier and the ASEAN countries that are pushing us to do open skies policy have more than hundreds of modern air crafts and strongest potential to extend their markets. Thus we have to open out sky to outside world and in a sequenced way to take advantage of globalization and regionalization to expand our own national carrier and air transport to grow faster as a result. To improve our transportation, the following measures need to be taken.

1. Reduce the minimum level of Red-Tape System( Bureaucratic management) 2. Perform Air Transform Service by low cost 3. Improve facilities of Air Transform/ reform structure 4. Improve domestic routes and build up multi model transportation net with smooth efficient and effective procedures. 5. Establish free trade zone of airports 6. Enhance tourism and tourism expenditure by government support 7. Improve banking System and ICT ( Information, Communication and Technology) to support and build up consumer friendly airport and airline operation system

In addition, natural disaster ( example Nargis cyclone in 2008) , political issue ( example Rakhine rebellion in Rakhine State) and other globally related economic issue such as Fuel price rising in 2017 that are also effect to the development for Myanmar aviation sector. Moreover not from the passenger point of view, but for the government must protect the local airlines even there are many benefits for passengers if the foreign low cost carriers comes in as Myanmar is not hub and spoke network in ASEAN Region. The role of air transportation is to perform ample, safe, smooth air transport service by lower cost and increasing the yields slowly for its own growth and development. And the air transport resources should enhance the country’s prosperity. The valued air transport resource and products will support the national economic development and successful competition in international arena.

REFERENCES

Ambrocius and /David the determinants of Domestic Air passengers Demand in the Republic of Southern Africa, vol 4, No 13, November 2013. AGAT(Air Transportation Action Group) 2012 Asian Development Bank, Myanmar Transport Sector Initial Assessment, October 2012 Aung Kyaw Soe (2017), Yangon University of Economics, An Assessment on Training Program of Civil Aviation Training Institute in Myanmar Aung Soe Moe (2011), Yangon University of Economics, A Study on Myanmar Civil Aviation. Aung Ye Tun, Director, Dept of Transport, Ministry of Transport, Myanmar Transport Infrastructure and logistics Development (28-1-2012) Benell, Dave W; Prentice, Barry E, 1993. A regression model for prediction the economic impacts of Canadian airports. Logistics and transportation Review; Jun 1993; 29, 2; ProQuest pg. 139 Button, K., Reggiani, A., (2011): Transportation and Economic Development Challenges, Edward Elgar Publishing, Cheltenham, 2011 Caglar Demirsoy, Analysis of stimulated domestic air transport demand in Turkey, Master Thesis, August 2012. Canadian Airport Council (CAC) Central Statistical Organiztion ( 2008, 2011) Ei Mon Kha (2012), Yangon University of Economics, A Study on Service Quality of Myanma Airways Gilbert, R.; Nadeau, K., (2001): Decoupling economic growth and transport demand: a requirement for sustainability, Conference Paper for “Transportation and Economic Development 2002”, Transport Research Board 4. Heinriche, Bofinger and Peter Roberts, Air Transport Indicators ICAO Annual Report of the Council, 2004 Ishutkina and Hansman, Analysis of the interaction between Air Transportation and Economic Activity, A World Perspective, Report No ICAT-2009-2, March 2009. Julie Perovic, the economic benefits of aviation and performance in the travel and tourism competitiveness in index. Kyi Kyi Oo (2015), Yangon University of Economics, A Study on Passenger Satisfaction of Airline Business. Lwin Lwin Htut (2010), Yangon University of Economics, A Study on Development of Domestic Air Transport Development in Myanmar. Mclanie Green, The Impact of Airport Development on Economic Development. Myanmar Airways Aviation Reports (2007, 2009 and 2014) Orhan Sivrikaya, Demand forecasting for Domestic Air transportation in Turkey. Record Arrivals shine light on tourism Eleven Media, weakness, warns MTF official, 15 December 2014. San Linn, (2019), Yangon University of Economics, Analysis on Improvement of Airport Service After Liberalization in Aviation Industry of Myanmar (Case Study: Customer Perspective at Yangon International Airport). Sandar Aung, 2008. Yangon University of Economics, A Study on Airport Operations at Yangon International Airport. Shujie Yao and Xiuyun Yaung, Airport Development and Regional Growth in China, Research Paper 2008/07. Thet Thet Latt (2015), Yangon University of Economics, A Study on Public Private Partnership of Air transportation in Myanmar. Thiha, Myanmar’s Airline ace competition intensities, 13.11.2013. Todd litnan (2010), Victoria Transport police Institute, Evaluating Transportation Economic Development. Wikipedia, the free encyclopedia www.airport.technology.com/projects/yangon-international.airport/ Yao and Yang, (2008/07)In Airport Development and Regional Economic Growth in China DCA reports (2014) Aviasolutions (2014) MNA- The way forward business plan TRANSPORTATION ENGINEERING AND PLANNING – Vol. I - Urban Public Transportation Systems – Vukan R. Vuchic Win Maung Thein, Yangon University of Economics, A Study on Aviation Operations and Safety Management in Myanmar Zaw, Nyein Chan, Yangon University of Economics, A Study on Disaster Preparedness in Myanmar Airports Zaw Win Than (2014) Myanmar Times, Myanmar aims to become regional aviation hub APPENDIX (A)

Table - Air transport passengers carried in Myanmar over the past 46 years

Change Change Year Value Year Value % % 1970 345,800 - 1995 334,500 4.62 1971 380,500 10.03 1996 334,500 0.39 1972 393,000 3.29 1997 334,500 0.00 1973 405,000 3.05 1998 333,200 0.00 1974 388,300 -4.12 1999 536,800 60.48 1975 391,300 0.77 2000 437,600 -18.48 1976 396,000 1.20 2001 398,216 -9.00 1977 410,000 3.54 2002 1,186,162 197.87 1978 425,000 3.66 2003 1,117,208 -5.81 1979 460,000 8.24 2004 1,392,244 24.62 1980 481,000 4.57 2005 1,503,624 8.00 1981 500,000 3.95 2006 1,620,895 7.80 1982 515,000 3.00 2007 1,662,866 2.59 1983 517,000 0.39 2008 1,637,923 -1.50 1984 487,000 -5.80 2009 1,527,346 -6.75 1985 509,000 4.52 2010 924,207 -39.49 1986 511,000 0.39 2011 1,539,676 66.59 1987 512,000 0.20 2012 1,663,425 8.04 1988 516,000 0.78 2013 1,572,120 -5.49 1989 308,000 -40.31 2014 1,926,969 22.57 1990 318,500 3.41 2015 2,095,503 8.75 1991 318,500 0.00 2016 2,597,993 23.98 1992 318,500 0.00 1993 318,500 0.00 1994 318,500 0.00 Source: www.indexmundi.com/facts/myanmar/indicators/AIR_PSGR

APPENDIX (B) Figure – Change in Air Transport passengers carried in Myanmar over the past 46 years 250 Change % 200 150 100 50 0 -50 -100 1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014

Source: www.indexmundi.com/facts/myanmar/indicators/AIR_PSGR APPENDIX (C)

Current Transfer Process at Yangon

Source: MNA- The way forward business plan

APPENDIX (D) Figure 3.4 Propensity to Fly by Country

Source: MNA- The way forward business plan

APPENDIX (E)

Figure - Idealized Passenger Process

Source: MNA Way forward business plan 2017

APPENDIX (F)

Figure Top 15 Airlines in Myanmar as of Summer 2017 Departing seats from Airport in Myanmar (in millions)

1.2 1.01 1

0.8 0.57 0.6 0.39 0.4 0.28 0.28 0.23 0.2 0.19 0.18 0.16 0.13 0.13 0.13 0.2 0.12 0.12

0

Number of Seats

Source: OAGS Schedules Analyser for w/c August 2017

APPENDIX (G) Figure: International weekly routes from Myanmar Summer 2017

100 93 90 80 70 63 57 60 50 40 32 30 30 19 20 14 9 7 7 7 7 7 7 10 0

No. of weekly routes

Source: OAGS Schedules Analyser for w/c August 2017

APPENDIX (H) Monthly Passenger Performances (2015 -2018)

1,600,000

1,400,000

1,200,000 Dec Nov

1,000,000 Oct Sept Aug 800,000 July June

Number Number of Passengers 600,000 May April March 400,000 Feb Jan

200,000

- 2015 - 2016 2016 - 2017 2017 - 2018

Source: Myanma Airways Powerpoints

APPENDIX (I) Profiles of Airlines in Myanmar Name of Fleets Averag Main Routes Airline e Age (OAG) In Service On Order Lessors of Fleet 1. Myanmar 9 ATR 72, 4 6 Boeing - - Domestic and National Boeing 737 737-8 MAX International Airlines – 800, 2 network Cassna 208 including Caravan,2 China, Hong Embraer Kong, 190 Singapore, Thailand and India 2. Air 1 ATR 42- MRJ90 -Fransom Ltd (1 20.7 Domestic Mandalay 300, 2 regional jet ATR 72-200) years network: ATR 72-200 aircraft - Plane Bagan, Business Mandalay, Leasing (1 ATR Heho and 72-200) Ngapali. -Remaining RGN to HEH, ATR 42 is NYU, TVY, owned AKY MDL to HEH, NYU MGZ to TVY, KAW 3. Yangon 2 ATR 72- None All aircraft are 14.0 - Airways 200, 1 ATR owned years 72-500 4. Air Bagan None - JSD 21.0 Corporation Pte years Ltd (1 ATR 42- 300) Undisclosed Lessor (1 ATR 72-200) - Remaini ng ATR 42-300 and ATR 72- 500 are owned 5. Asian 1 Airbus None - CLAST 2014- 15.3 RGN to MDL, Wings A321, 1 ABS Portfolio years MDL to MYT Airways 3 ATR 72- (1 ATR 72-500) 500 - Remaining ATR 72 and A321 are owned 6. Air KBZ 1 ATR 42- None - 9.1 15 domestic 500, 4 years destinations ATR 72- 500, 4 ATR 72- 600 7. Golden 1 Airbus - - Air Lease 4.3 International: Myanmar A320, Corporation (2 years RGN to BKK, Airways 2 ATR 72- ATR 72-600) SIN 600 - ILFC (1 Domestic: A320) MDL 8. FMI 1 ATR 42- None - Rolls- ATR YGN-NPT Airways 300, Royce Credit 42 = 1 Canadair Corp (1 ATR 24.0 CRJ-200, 42-300) years ATR72 and - CRJ-200 Beech is owned 1900D 9. Apex - - - - NPT, YGN Airways 10 Mann 2 ATR 72- No aircraft All aircraft are 0.5 domestic . Yadanarpo 600 on order owned. years routes include: n Airways YGN to MDL, HEH and NYU and MDL to HEH, NYU, TLK and MYT. Source: wikipedia

APPENDIX (J) Yearly Revenue, Expenses & Profit/ Loss

Source: Myanma Airways Powerpoints to Pyithu Hluttaw

APPENDIX (K) 2015-2016, 2016-2017 and 2017-2018 Monthly Passenger Performance 7y6

Source: Myanma Airways Powerpoints to Pyithu Hluttaw

APPENDIX (L) Yearly Ground Handling Revenue

Source: Myanma Airways Powerpoints to Pyithu Hluttaw

APPENDIX (M) Survey Questionnaire

My name is Aryu and I am studying Master in Development Studies in Yangon University of Economics. Currently, I am writing thesis “A Study in Development of Civil Aviation Airlines Industry After Liberalization in Myanmar” . It would really help me out if you could fill the answers in my survey. It will take only a few minutes to answer all of these questions. The data are private and confidential, and they will not be reveled without your consent.

Part I – Background Information

The objective of Part I is to accessed the demographic characteristics of passengers like sex, nationality, age, literacy, and source about MNA.

Please choose the answer which is relevant to you.

1. I am ( ) Male ( ) Female.

2. I am ( ) Local ( ) Foreigner

3. Age ( ) Under 18 ( ) 19 – 25 ( ) 26 – 33 ( ) 34 – 40 ( ) 41 and above

4. Education Level ( ) Basic Education ( ) High-school ( ) Attending University ( ) Graduate

5. How did you know about our airline? ( ) Magazines/ Journals ( ) Television/ Radio ( ) Internet ( ) Friends/ Family/ Relatives ( ) Other:______

Part II – MNA’s Website and Online Ticket Reservation

The objective of Part II is to determine the passenger’s familiarity with MNA’s Ticket Reservation Service. All passengers who reserved the tickets by themselves or by agents have to select the most relevant answers.

6. Do you know how to book the tickets of MNA flight? ( )Yes ( ) No

If your answer is NO, please leave the Part II questions and move to part III.

7. When you make online reservation, which devices do you use? ( ) Smart Phone ( ) Computer ( )Other:______

8. Is the MNA website is user-friendly to book the tickets? ( ) Yes () No

9. Do you think using website to book the tickets online is more efficient than booking offline (through agents)? ( ) Yes ( ) No

10. Is it feasible to find enough information on services and facilities on MNA website? ( ) Yes ( ) No

Part III - Our Services and Customer Satisfaction

The main purpose of Part III is to evaluate the passenger’s satisfaction regarding services delivered by MNA.

11. MNA ground staffs are friendly, helpful and cooperative. ( ) Strongly disagree ( ) Disagree ( ) Neutral ( ) Agree ( ) Strongly agree

12. When completing the check-in at airport, the instructions are given clearly and easy to follow. ( ) Strongly disagree ( ) Disagree ( ) Neutral ( ) Agree ( ) Strongly agree

13. Inflight services provided by MNA is satisfying ( ) Strongly disagree ( ) Disagree ( ) Neutral ( ) Agree ( ) Strongly agree

14. The delicacies on board is excellent ( ) Strongly disagree ( ) Disagree ( ) Neutral ( ) Agree ( ) Totally agree

15. The seats are confortable, spacious and enjoyable ( )Strongly disagree ( ) Disagree ( ) Neutral ( ) Agree ( ) Totally agree

16. In the case of flight delays or flight cancellations, enough information is disseminated regarding the status of flight ( ) Strongly disagree ( ) Disagree ( ) Neutral ( ) Agree ( ) Totally agree

17. MNA’s special services (wheelchair assistance, stowing an assistive device or seat selection for disabled persons) is excellent ( ) Strongly disagree ( )Disagree ( ) Neutral ( ) Agree ( ) Strongly agree

If you still have any feedback or suggestion regarding our flight, please write down below. ______

I fully give my consent to reveal these answers. Thank you for participating the survey and have a nice flight!