Japan's ANA drops plan to buy stake in Myanmar airline

Japan's All Nippon Airways (ANA) has dropped its plan to buy a 49 per cent stake in a Myanmar airline, blaming "intensified" competition in the country as it quickly emerges from years of economic isolation.

ANA Holdings -- the airline's parent company -- announced last year that it planned to invest about US$25 million (S$31 million) in Asian Wings Airways (AWA).

But "competition between new and old airlines in Myanmar has intensified... calling into question the assumptions made at the time of the original decision", the Japanese firm said in a statement Wednesday (July 30). "Ultimately, negotiations for the capital participation with AWA were unable to reach an agreement, and the investment plan was cancelled as a result." The move will not impact earnings for the current fiscal year, ANA added.

The announcement came as the Japanese carrier said it had swung back to profitability in the three months to June.

With little room for growth in the domestic market, ANA and other Japanese firms have been eyeing Southeast Asia as a lucrative market. Foreign companies have piled into Myanmar since the installation of a nominally civilian government in 2011, eager to make the most of opportunities in the country as it opens up following decades of junta-led government.

Asian Wings said it was disappointed by the ANA pullout. "This is a big loss, not only for us but also for other Myanmar local airlines," said the Myanmar airline's executive director Lwin Moe, adding that it would not have "any difficulties" as a result of the decision.

Shares in ANA closed 2.31 per cent higher at 256.5 yen on the Tokyo Stock Exchange Thursday.

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Emerging Asian carriers make presence felt with plane deals

Emerging Asian carriers made their presence felt at a major airshow on Thursday with multibillion-dollar deals that underscored the region's importance as the growth driver of global aviation.

Four relatively small Asian carriers already had a combined order book of more than $11 billion halfway into the six-day Singapore Airshow, with smaller planes as their preference.

Airline executives said many smaller cities in Asia remain underserved despite the explosive growth in budget air travel, and they will use the new planes to connect such destinations to metropolitan centres.

Asia's expanding middle class is driving demand, said Song Seng Wun, regional economist with Malaysian bank CIMB.

"It's really a function of regional economies experiencing spending power of the rising middle class which benefited from so many years of steady growth," Song told AFP.

In the latest deal, Indian carrier Air Costa on Thursday ordered 50 E-Jets E2 aircraft, which can seat 70-130 passengers, from Brazilian manufacturer Embraer worth $2.94 billion.

The deal with Air Costa, which began operations only four months ago, also includes purchase rights for 50 more of the aircraft, both companies announced at the show.

With the orders, Air Costa will become the first customer of the E-Jet E2 in the Indian market when it takes delivery of the first plane in 2018.

Thai budget carrier Nok Air also on Thursday firmed up orders for two Q400 86-seater planes from Canada's Bombardier worth $63 million.

Nok Air indicated it may buy six more depending on its needs.

The Singapore Airshow began Tuesday with an order by Vietnamese budget carrier VietJetAir for 63 Airbus A320 jets worth $6.4 billion.

The deal also covered rights to acquire or lease 38 more A320s, potentially boosting VietJetAir's current fleet of 11 A320s tenfold.

The Vietnamese airline, founded only in 2011, plies domestic routes as well as services to Bangkok, Seoul and Kunming in China with its current fleet of leased planes.

In another deal, US aicraft maker Boeing on Wednesday announced that Nok Air had committed to buy 15 B737s worth $1.45 billion.

Bangkok Airways, which brands itself as a "boutique carrier" that flies to selected tourist destinations, on Wednesday also signed up to buy six 72-600s from European plane-maker ATR in a deal worth $150 million.

Air Costa executives said they would use the E-Jets E2 aircraft from Embraer to serve smaller Indian cities.

"Our focus has been the tier-two and tier-three cities in India," Air Costa chief financial officer Vivek Choudhary told a media briefing Thursday.

"Our philosophy is that we believe that 70 per cent of the population, of the huge 1.2 billion population in India, still reside in these non-metros," he added.

"Basically we are linking the metros to the smaller cities."

Choudhary said the carrier expects the air transport sector in India to grow dramatically in the next 15 to 20 years.

"The huge size of the middle class in India and the profitability levels that are going up adds to the demand in air travel," he added.

Nok Air chief executive Patee Sarasin said his airline was looking to expand into Myanmar following the opening up of the formerly army-ruled state.

"I think Myanmar has really stepped up," Patee told reporters after firming up the two jet orders with Bombardier.

"We think it's a beautiful country and we see a high potential that Myanmar will grow very fast," he said.

"I am sure within the next few years we are going to see Myanmar growing as fast as Vietnam."

Economist Song said such new markets were an "added bonus" as even without them demand for travel in Asia was robust.

"Frontier markets are an added bonus," he said. "Even without the likes of Myanmar, demand continues to grow."

Airbus, Boeing and Embraer -- in their 20-year forecasts for the industry -- all said the Asia Pacific is the key market to enter because of the burgeoning middle class.

Embraer's president and chief executive Paulo Cesar Silva said passenger traffic in the region "is mostly composed by secondary markets with low and medium demand densities of up to 300 passengers daily each way".

"Some 60 per cent of those markets are not served nonstop, and around half of all markets served do not allow for same day return travel," he said.

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Myanmar carrier leases 10 Boeing planes worth US$960m

Myanmar's national carrier on Tuesday signed a contract with US firm GE Capital to lease 10 Boeing aircraft worth nearly a billion dollars in a major makeover for the largely domestic airline.

US ambassador to Myanmar Derek Mitchell described the agreement as the "largest commercial sale" by a US company to Myanmar in decades.

Under the agreement, state-owned Myanma Airways will lease 10 new Boeing 737 planes from GE Capital Aviation Services (GECAS), the commercial leasing and financing arm of US giant General Electric.

Delivery of the planes is scheduled to begin in June 2015.

The agreement was signed on the sidelines of the Singapore Airshow, Asia's biggest aerospace and defence show which began Tuesday.

"The contract calls for six Boeing 737-800 models and four Boeing 737-MAX models. The aircraft will deliver through 2020," GECAS said in a statement.

The planes are valued at US$960 million at list prices.

It will be a major makeover for flag carrier Myanma Air, which was established in 1948 and currently operates mostly domestic services using Fokker F28 jets and ATR turboprops.

For flights to smaller domestic airports, Myanma Airways uses Beechcraft and Cessna planes.

"We are pleased at GE to work with Myanma Airways to provide new, state-of-the-art Boeing aircraft," Norman Liu, president and chief executive of GECAS, said in a statement.

"This is an important milestone for the airline and and for the development of Myanmar's aviation industry."

Myanmar Transportation Minister Nyan Htun Aung said the new Boeing planes would be used to expand the carrier's routes to East Japan and South Korea.

The carrier's sole international destination currently is Gaya in India, which is important for Buddhist pilgrims.

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China's MA60 planes in spotlight after safety scares

China's high-flying aviation ambitions suffered a setback on Tuesday as Myanmar grounded several planes made by the Asian powerhouse and Indonesia ordered special checks on its fleet following a series of safety scares.

An MA60 turboprop airliner with 52 people on board crash-landed at an airport in eastern Indonesia on Monday, leaving two passengers with minor injuries and forcing state-owned carrier Merpati to write off the plane.

On the same day an MA60 operated by Myanma Airways and carrying about 60 people skidded off a runway at a domestic airport in southern Myanmar, although nobody was hurt.

It was the second such incident in less than a month involving one of three MA60s owned by Myanma Airways.

"I think the accidents happened because of system failure. We will check all the systems. That's why we stopped the operation of the planes," Tin Naing Tun, director general of Myanmar's Civil Aviation Department, told AFP.

"The systems also showed warnings before," he added.

The Chinese maker of the plane, AVIC Xi'an Aircraft Industry Company, could not be reached for comment on Tuesday.

China is fighting for a bigger share of the multi-billion dollar global aviation market.

The communist nation is developing the ARJ-21 regional jetliner and the 168-seat C919 plane in the hope of competing with Boeing and Airbus.

Its turboprop-powered airliners have a chequered record. In May 2011 an MA60 operated by Merpati crashed in West Papua province, killing 25 people.

Following that accident, Indonesian authorities banned the plane from landing at three airports with difficult approaches.

After the latest incident on Monday, Indonesia's transport ministry said it would carry out a "special audit" - the term given to checks carried out following serious accidents - on the MA60s.

The process would take up to three months, ministry spokesman Bambang Ervan told AFP.

"We will investigate how maintenance work was carried out, the availability of spare parts, crew training, and all matters related to operations," Ervan said.

Merpati is the only Indonesian carrier which currently uses the Chinese-made planes, with eight in operation and five more undergoing routine maintenance work, according to airline spokesman Herry Saptanto.

"We have no plans to ground our planes because of yesterday's incident," he added.

"Our MA60 aircraft have been certified by Chinese and Indonesian aviation authorities. We will continue to fly them."

Dudi Sudibyo, senior editor at Indonesian aviation magazine Angkasa, noted however that MA60 planes were not certified safe by US or EU aviation authorities.

"Merpati was too hasty in purchasing the aircraft," he told AFP.

Sudibyo said the airline's pilot training, maintenance procedures and stock of spare parts should be investigated. "They should have grounded the MA60 for a week or two while the investigations are ongoing."

Other operators of the plane include Lao Airlines, Philippines' Zest Airways and several Chinese carriers.

Following the 2011 accident, there were calls by Indonesian lawmakers to ban the planes altogether.

President Susilo Bambang Yudhoyono ordered a review into the controversial US$220 million deal to buy the MA60s amid allegations of kickbacks and concerns about the planes' airworthiness.

A special audit carried out after the 2011 accident found the pilot was not familiar with operating the plane, and did not find any problems with the aircraft, according to Ervan.

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Confidence in the airworthiness of the MA-60 is being badly hit when accidents involving it comes so often. Authorities in respective countries should ground all flights while investigations are ongoing. However, such a move will probably bankrupt the airline, thus the continuation to fly while investigations are incomplete are tolerated by the lax in regulations in these countries.

What's worrying is the MA-60 not being certified safe by US or EU aviation authorities. When their standards are not reached, the safety of flight looms a very big question mark over the heads of the airlines operating the aircraft.

Plane overshoots runway in Myanmar, injuring two

A passenger plane carrying 55 people overran the end of the runway at an airport in eastern Myanmar due to suspected brake failure, injuring two people, state media reported on Friday.

The propeller, landing gear and engine of the Chinese-made Xian MA60 turboprop were damaged in the incident, which happened at Monghsat in Shan State on Thursday morning, according to the New Light of Myanmar newspaper.

The flight was operated by state-owned Myanma Airways, according to the report, which said the two injured were sent to hospital, without giving details about their condition.

Concerns about Myanmar's air safety were heightened by an airplane crash-landing in December at Heho airport, also in Shan State, that left two people dead, with foreign tourists fleeing the burning jet.

Myanmar's aviation and tourist industries are struggling to keep up with fast-growing demand as foreign visitors flock to the country, which is emerging from decades of junta rule.

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It is always not easy for a country to enhance its infrastructure overnight. With airlines pouring in to Myanmar currently, it is crucial that the country is able to keep up with the traffic. Thank god for this case there wasn't any casualty.

2 dead, 11 hurt in Myanmar plane crash landing

A Myanmar plane carrying 65 passengers including foreign tourists crash-landed in eastern Shan state on Tuesday, leaving two people dead and 11 others injured, the airline and officials said.

Air Bagan said the aircraft, an ageing Fokker-100, was forced to make an emergency landing two miles (three kilometres) from Heho airport, which is the gateway to the popular tourist destination of Inle Lake.

"One passenger who was missing was found dead inside the plane. We are still trying to identify who the dead passenger is," the carrier announced in a statement posted on its Facebook page.

The victim was an 11-year-old child, according to the information ministry, which added that four foreigners were among those hurt in the accident.

Another person was killed when the plane struck a motorbike on a road near the airport, it said.

The exact circumstances of the incident were not immediately clear, but a government official said a fire was reported in one of the engines as it approached Heho airport at around 9 am (0230 GMT).

"Because of the emergency landing near the airport, the plane broke up in the middle," the official told AFP on condition of anonymity, adding that passengers were evacuated.

A local tour guide waiting at the airport for passengers on the Air Bagan flight to arrive said the fire had "burnt almost the whole plane".

Air Bagan spokesman Ye Min Oo said the two pilots among the injured were taken to hospital, although their condition was not immediately known.

"The cause of the accident is not clear yet. Only the pilots will know the cause, but we can't contact them yet as they have been sent to hospital," he said.

Air Bagan is one of several domestic carriers seeking to profit from a tourist boom in Myanmar as it emerges from decades of military rule. It is owned by Tay Za, a tycoon known for his close links to the former junta.

The airline operates two Fokker 100 jets, which are no longer manufactured.

Long isolated from the world under decades of junta rule, the Southeast Asian nation has seen an influx of tourists and business travellers in recent months following a raft of political reforms.

The surge in demand for air travel has stretched Myanmar's aviation infrastructure, in particular in remote airports.

Yangon International Airport, the country's main terminal, is set to exceed its limit of 2.7 million passengers this year and the Department of Civil Aviation warned in July it needs urgent upgrading.

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Ageing plane, engine fire, emergency landing not on a proper runway, a total disaster waiting to happen. What's glad is the low level of collateral damage, although the plane is almost fully burnt. Hopefully Myanmar will take this as a lesson and beef up on its safety level.