US$96 million for first phase upgrades of three Myanmar airports
5 March 2019
A raft of agreements between the government and private firms are expected to be signed this month for the upgrading of three regional airports to international standards.
The three airports concerned – Heho airport in Shan State, Mawlamyine airport in Mon State and Kawthaung in Tanintharyi Division – will be upgraded to boost regional development as well as improve accessibility.
According to Department of Civil Aviation Deputy Director-General U Ye Htut Aung, the first phase of the upgrading works that includes the construction of customs, immigration and quarantine facilities will total US$96 million.
Upgrades for Heho airport will cost US$40 million, with US$20 million and US$36 million respectively for Mawlamyine and Kawthaung airports.
The airport upgrading project will be done in two phases. In the first stage, they will be upgraded to become Custom Immigration Quarantine airports and in the second stage, the airports are expected to achieve international status.
U Ye Htut Aung pointed out that the upgrades will be completed faster with the participation of the private sector through public-private partnerships. “The future is looking up for air transportation,” he added.
He said among the three airports, the one at Heho has the “highest potential”, followed by Kawthaung. Mawlamyine airport was not originally chosen as one of the airports to be upgraded but the Mon State government lobbied for the upgrade to improve accessibility as millions of its residents who work in Thailand, Malaysia and Singapore have to use a circuitous and more expensive route through Yangon.
The KBZ group, which owns Air KBZ as well as Myanmar Airways, has a 65pc stake in a partnership while Toyota Tsusho, a member of the Toyota group, has 35pc stake, for the Heho airport upgrade.
For the Kawthaung airport upgrade, the government has identified a consortium involving Golden Myanmar Airlines, which will take the lead with a 65pc stake, KMA Resources with 33pc while Tanintharyi Capital and Beijing ZH each have 1pc.
Grand Hinthar and Bangkok Aviation Services Enterprise have also formed a partnership for the Mawlamyine airport project but have not worked out the stakes both will hold in the venture.
Grand Hinthar has plans to promote Mon State’s tourist attractions, including the Kyaiktiyo Pagoda, especially to Thai tourists but these plans hinges on having improved accessibility to Mawlamyine.
U Ye Htut Aung said initially only chartered flights will be allowed into these three airports but once the second phase has been completed, scheduled flights will be allowed to land following inspections for quality and safety.
An international valuation company has also made an assessment of the three airports, including the land, runways and buildings, with the valuation from the assessments used as the government’s investment portion.
The costs for the second phase, which will bring the airports to international standards, have not been worked out but will include extending the runway, building taxiways and improving the apron.
U Ye Htut Aung said constructing the taxiways will likely incur additional land acquisition costs too, while the second phase of the upgrades will also need to take into consideration additional facilities for international travelers. Other costs include navigation, signaling and communications equipment.
He said the private companies, both local and their foreign partners, was selected in December 2018 and negotiations have been underway with the agreements to be out by this month. Among the terms being negotiated were the yearly construction completions, project financing and technical aspects of the construction.
The discussions include allowing the private firms to run the operations of the three airports for a term of 20 years with two 5-year renewable terms on a profit-sharing basis similar to the Yangon and Mandalay airport upgrade agreements.
This includes a profit share of 5pc to the government in the first 10 years of operations, 10pc for the subsequent 10 years and 15pc in the following 10 years. Thereafter, the government will take over the airports.
Currently, Myanmar has three international-grade airports – Yangon, Mandalay and Nay Pyi Taw – with the tourism potential together with more efficient transport of goods and people are important push factors in upgrading other airports.
Besides these airport upgrades, the government has also pushed for the completion of Chin State’s first major airport – Surbung airport in Falam township, which now has a target date of September 2020 from the original completion date of 2021-22.
The K30 billion airport, which began construction in 2016-17, will make the state more accessible from Nay Pyi Taw and Yangon and encourage more tourists.
The state government also has plans to open smaller airports in Tiddim, Tonzang, Falam and Hakha townships while a small domestic airport in Matupi township will be operational soon.
The Ministry of Hotels and Tourism had pinpointed 14 out of the 31 domestic airports to undergo upgrades in 2016, with Heho, Kawthaung, Nyaung-U and Thandwe among them.