Making upgrades: Airport capacity is being expanded as part of the master plan

Skyrocketing demand to visit Myanmar is driving a proliferation of public infrastructure investment as the government prepares for the much greater numbers of tourists that are likely to arrive in coming years. With the number of air routes and the frequency of flights into Yangon having risen significantly since 2012, Yangon’s small international airport is already overstretched. Although Yangon is the main international gateway into Myanmar and the hub for domestic flights, its airport is designed to handle just 2.7m passengers a year. Mandalay receives regular flights from only three foreign airports, and Naypyidaw began receiving its first regular international flight in September 2013, but both have bigger airports than Yangon. Actual throughput at Yangon airport surged to some 3m passengers in 2012, while the airport’s parking area for aircraft has become routinely packed to its limit.

Build Up

The Department of Civil Aviation (DCA) has an aggressive, three-fold plan to resolve the Yangon bottleneck: to build a new, bigger airport 80 km from Yangon; to upgrade and expand its current airport; and to upgrade and expand Mandalay’s airport and direct more international flights there. All three projects are being offered through international tenders that will effectively turn over management of Myanmar’s international gateways to foreign private hands through build-operate-transfer agreements.

In August 2013 the DCA announced that a South Korean consortium won the tender to build the new airport, called Hanthawaddy International Airport. The project is led by Incheon International Airport, South Korea’s largest, which has topped most global rankings of airports by groups such as Airports Council International, Skytrax and Global Traveller magazine.

New Landing

Located near the town of Bago, Hanthawaddy airport has a $1.1bn estimated cost and an initial capacity of 12m passengers a year for its scheduled opening in 2017. With room to expand to 35m passengers a year and space for multiple runways, the project will represent a move forward in Yangon’s abiity to receive visitors. Its drawback is its location, some 50 miles north-east of downtown Yangon, which, with growing traffic, could be a long drive.

The consortium also includes three of Korea’s largest construction firms: Halla, Lotte and Kumho. Kumho, part of the Kumho Asiana group that also owns Asiana Airlines, specialises in airport services and construction of airport facilities. Posco ICT, of steel giant Posco, is responsible for information and communication technology. The consortium’s victory in the tender means it has priority negotiation rights with the DCA.

Another ground-breaking feature of the Hanthawaddy project is that it represents 100% foreign investment in a public works project, which has only been allowed since late 2012, when the new Foreign Investment Law was adopted. The tenders to expand the Yangon and Mandalay airports were restricted to consortia involving at least one domestic company.

Other Upgrades

A consortium of Japanese companies won the tender for the Mandalay airport upgrade, announced in 2012. Mitsibushi and Jalux, an airport services firm, teamed with Myanmar’s SPA Management, part of the Serge Pun Group. The Yangon airport expansion, initially announced as a modest 40% capacity upgrade, was transformed into a larger project to more than double the Yangon airport’s annual capacity to 5.5m passengers by 2015. That tender was won by a consortium, including China Harbour Engineering and a pair of Singapore and Malaysian consultancies. They teamed with Myanmar’s Pioneer Aerodrome Services, which already operates Yangon’s passenger terminal.

The government has also been working with the Asian Development Bank (ADB) to identify many smaller projects crucial to developing the sector. In June 2013 the government unveiled its Tourism Master Plan, partly funded by the ADB, made up of 38 projects valued at nearly $500m. These include improving feeder roads to key tourist destinations, building meeting, conferencing and exhibitions facilities in Yangon and major tourism centres, and improving sanitation at Inle Lake. Skyrocketing demand to visit Myanmar is driving a proliferation of public infrastructure investment as the government prepares for the much greater numbers of tourists that are likely to arrive in coming years. With the number of air routes and the frequency of flights into Yangon having risen significantly since 2012, Yangon’s small international airport is already overstretched.

Although Yangon is the main international gateway into Myanmar and the hub for domestic flights, its airport is designed to handle just 2.7m passengers a year. Mandalay receives regular flights from only three foreign airports, and Naypyidaw began receiving its first regular international flight in September 2013, but both have bigger airports than Yangon. Actual throughput at Yangon airport surged to some 3m passengers in 2012, while the airport’s parking area for aircraft has become routinely packed to its limit.

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The Report: Myanmar 2014

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