YANGON, 26 October 2018: Just weeks before Myanmar’s peak season kicks in, early November, airlines say they will maintain current domestic fares.
Myanmar Times reported that airlines flying domestic services have no option, but to hold fares, despite steep increases in fuel prices and a weakening kyat against the US dollar.
Airlines face a damned if you do, damned if you don’t scenario. If fares increase it will curtail domestic travel demand forcing locals to return to land transport — trains and buses.
If they don’t increase fares they are forced to absorb higher fuel bills and foreign currency charges.
A slow down in international travellers to Myanmar and the subsequent drop in foreign bookings for domestic flights means airlines are more than ever reliant on the price sensitive domestic market.
If international travel surges the airlines would have a window of opportunity to increase fares at least during the peak season travel months November to March. However, that is unlikely.
Myanmar’s airlines are paying over the odds for aviation fuel due to a supply monopoly and high taxes. They are at a serious disadvantage when compared with airlines from neighbouring countries where fuel costs are lower.
According to the Myanmar Times both Air KBZ Golden Myanmar Airlines decided against increasing fares during the peak season, which is good news for inbound travel companies that have booked seats for their overseas partners.
Myanmar airlines adopted a long-standing policy of quoting domestic fares in US dollars and converting the fares to kyat based on the prevailing exchange rate. As the US dollar strengthens against the kyat, there is a risk that fares will increase marginally to cover exchange volatility.
But the real concern is the country’s jet fuel prices that average USD85 a gallon, almost USD1 higher than in Singapore. This is because there is just one supplier of jet fuel in the country — a joint venture between Puma Energy and state-owned Myanmar Oil and Gas Enterprise.
Four of the country’s 10 airlines have closed operations, the most recent being Air Mandalay after 24 years of service. The others were Air Bagan, Apex Airline and FMI Air. All of them blamed their predicament on escalating fuel and maintenance costs.
(Source: Myanmar Times)
Source: TTR Weekly