Japan’s ANA pulls out of Myanmar joint venture airline project

The plains of Bagan, Mandalay, Burma. Pic: lkunl/Shutterstock.com

JAPAN’S All Nippon Airways (ANA) Holdings Inc has ditched plans to create a joint venture in Myanmar after its air operator’s certificate was rejected, the airline said Monday.

The Asian Blue joint venture was established in 2016 between ANA and local investor Golden Sky World, owned by property-to-banking conglomerate Shwe Than Lwin. It was set up to focus exclusively on international routes as the Burmese tourism industry has started to flourish after decades under military rule.

ANA had agreed to take a 49 percent stake in the airline, with Shwe Than Lwin controlling the remainder.

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The deal was ANA’s second attempt at entering the Myanmar aviation market following a failed bid in 2014 to acquire local carrier Asian Wings International, owned by Air Bagan and Sun Far Travels.  All Nippon Airways – one of three carriers ANA Holdings owns – signed a partnership agreement in August 2013 with with Asian Wings under which it would pay US$25 million for a 49 per cent stake in the domestic carrier.

It was touted as the first deal between an international airline and a domestic carrier, but the two sides announced the deal had been cancelled in July 2014. ANA was said to be put off by the small size of the domestic market and strong competition from more than half a dozen other domestic carriers.

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“We can’t find a reason,” said ANA’s Myanmar representative H. Sammy Aramaki, referring to the government’s refusal to issue the operating licence.

“The management can’t wait for any longer,” he said, whose company filed the application in May last year. He said ANA’s operation in Myanmar would continue as usual.

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A spokesman for Myanmar’s Department of Civil Aviation said ANA’s AOC application was rejected. He did not elaborate.

The decision comes amid growing frustration over the Burmese government’s management of the economy. The country’s much-needed new foreign investment approvals have slowed since Aung San Suu Kyi’s National League for Democracy won a election victory in late 2015 in one of the region’s poorest countries.

“We regret the fact that we decided to wind up the company, but we would like to keep on exploring the possibility to contribute to the development of the airline industry in Myanmar,” an ANA spokesman told Reuters.

ANA, which operates daily flights between Myanmar’s commercial capital Yangon and Tokyo, holds a 8.8 percent stake in Vietnam Airlines.

Additional reporting by Reuters