Emirates faces challenges to Myanmar collaboration
The gulf carrier wants to work with local airlines and travel agents when it starts Myanmar operations in August but faces regulatory and technical hurdles.
EMIRATES airlines is eager to work with local carriers and travel agents when it starts Myanmar operations in August. There are regulatory and technical hurdles to commercial cooperation, but also signs some barriers will be broken down.
The gulf carrier is scheduled to land in Myanmar for the first time on August 3, and will fly daily from Dubai to Yangon and onward to Hanoi.
The airline joins competitor Qatar Airways in servicing Myanmar from the Middle East, and is part of a profusion of international airlines expanding their Myanmar operations.
Emirates is keen to collaborate with local airlines and agents, but there are challenges to overcome, said Mohammad Sarhan, country manager for Thailand and Myanmar.
These stem mainly from Myanmar’s isolation from global travel systems and organisations.
One example is the worldwide payment system for travel and sales agents provided by the International Air Transport Association (IATA).
The system – known as a Billing and Settlement Plan (BSP) – means that airlines do not have to deal with individual travel agents, and receive all payments from agents in one electronic settlement.
But Myanmar is not using a BSP yet, said Mr Sarhan, adding that this also requires direct connection between a local travel agent and Emirates.
Operating outside of a BSP means a travel agent has to provide a guarantee of payment to an airline, whereas within the BSP it is the IATA that covers the risk of non-payment, he added.
Albert Tjoeng, a communications director for the IATA in Singapore, said the IATA is conducting a feasibility study on setting up a BSP in Myanmar.
The reliability of the banking infrastructure, and support from local airlines and travel agents will be crucial, he said.
Emirates is also eager to collaborate with local airlines and form agreements that would allow passengers to fly with Emirates from Dubai to Yangon and then onward to internal Myanmar destinations with a local carrier, Mr Sarhan said.
The use of a BSP would help smooth such collaboration but there are other potential problems.
One issue is that Emirates requires its local airline partners to pass the IATA Operational Safety Audit.
The only Myanmar airline to be IATA-certified is Myanmar Airways International, which does not operate internal Myanmar routes.
On the commercial side, another problem is that few local Myanmar carriers use a global distribution system (GDS) – a computer network linking airlines to travel agencies.
A travel agent in Europe or the Middle East could only book a customer a flight from Dubai to Yangon with Emirates and Yangon to a smaller internal airport such as Bagan with a local carrier if both the airlines providing the flights are on a GDS.
“System integration is the most important thing,” said Mr Sarhan.
“We need those local airlines to be available on a GDS. Usually, this is the first obstacle [to collaboration].”
Most domestic airlines instead use cheaper Web-based systems, said U Zaw Min Aung, chief operating officer at local carrier Air Mandalay. In addition to Web-based systems being cheaper and easier for staff to use, slow internet connections in Myanmar would make moving to a GDS challenging, he said.
Another IATA service is its central clearing house, which collaborating airlines use to settle accounts.
The clearing house processed US$54 billion in transactions in 2015, according to the IATA, and interline cooperation is made easier if local airlines join the clearing house, Mr Sarhan said.
The only Myanmar carriers that are active members of the clearing house are the two international airlines – Myanmar National Airlines and MAI.
Another option for local collaboration is for visa processing. Emirates would like to find a third-party firm with which it can connect UAE nationals that need a Myanmar visa, Mr Sarhan said.
The airline already connects UAE nationals flying to other countries with third-party companies that can help with visa applications, he added.
The easiest way to fly to Yangon from Dubai with Emirates in the past was to fly direct to Bangkok, where UAE nationals are able to secure a Myanmar visa within a day, and take a connecting flight to Yangon.
But there is no Myanmar embassy in the UAE, meaning potential travellers flying direct to Yangon will likely use the Myanmar embassies in Saudi Arabia or Qatar, Mr Sarhan said.
‘We need those local airlines to be available on a GDS. Usually this is the first obstacle [to collaboration].’
Mohammad Sarhan Emirates