August, 2019 Yangon University of Economics
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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.