ch-aviation interview: Peter Davies, CEO Air Malta

Air Malta, the sole Maltese airline offering scheduled flights, has made major losses in the recent years. The fully state-owned carrier is currently undergoing a big restructuring process.

ch-aviation had the possibility to meet Peter Davies, CEO at Air Malta and to talk with him about the restructuring process and the future of the airline.

Air Malta – Airline Information

Air Malta – Aircraft and Fleet List

Air Malta – Recent News

Air Malta – Airline Route Network

When did you start to work at Air Malta and what have you done before?
I joined Air Malta in March 2011. I have worked in the airline business for the last 40 years and previously I served as CEO for Air Southwest in the UK, Caribbean Airlines in Trinidad & Tobago and for SN Brussels Airlines in Belgium.

What has changed since then?
When I came to Air Malta the situation was very serious. The airline was struggling hard financially and a number of processes were broken with Air Malta in a fight for survival.
In 2011 the airline made a loss of 30 million Euros.
The restructuring plan was a critical element to start the turnaround process. We were in a position where aid was required from government and the government needed the European Commission’s approval.
We went through an exhaustive process to make sure that the five year business plan we presented was robust and achievable. Our objective was very clear: for the airline not only to survive but also to achieve sustainable profitability.
European Law states that a government can only ask for state aid once in 10 years. We needed to make sure that the restructuring plan would succeed. It was essential that our plans were thorough and credible..
Air Malta is now on course to achieve break-even this year after restructuring efforts helped it narrow losses in the year to 30 March 2013 to around €15 million.
By next year we expect to be profit-making.

What are the main aspects your the cost savings program?
My first priority was to streamline the organisation and reduce costs. We have modernized the management and since we were highly over staffed, we needed to reduce our work force by 450 people.
We needed to become more efficient. Other costs including supplier contracts were not in line with industry standards and had to be revised.
The second priority was to review processes and procedures across the areas of the airline which were outdated and not in line with the requirements of an airline the size of Air Malta.
We also needed to improve our revenue position. We now have extra income through ancillary revenue like seat reservation, charges for seats with extra legroom and similar. The airline did not offer all of these services before.
In parallel to these changes we embarked on an internal ‘cultural revolution’, to support the big changes that we were doing. To be a true agent of change, you need to disrupt the ways you do things.
We are making progress on all fronts and the national pride in Air Malta is being regained.

Was there a lot of resistance by the employees? 
It was not easy but we had to tell them the truth. We had to be honest to them. The airline would have shut down completely if we had not reduced the number of employees.
We wanted to pull them through instead of pushing them through. We organized meetings, kept employees informed of developments and offered schemes for voluntary and early retirement.
Overall the process was smooth and not one single day was lost due to a strike action.

You are wholly owned by the Maltese government and they are financing your restructuring process. Is there any danger that the European Commission forces you to pay back the subsidies?
We don´t have to pay-back these funds as long as we stick to the restructuring plan. The European Commission has given us the green light to move forward.

What were the main goals of the rebranding one year ago? Is it justifiable that a struggling carrier spends a lot of money on a new design?
The Air Malta brand was tired. The previous livery was created over 20 years ago and we needed to be re-positioned for the 21st century. But, more importantly, since a lot of our business is leisure based, we have to promote Malta overseas. Our branding now focuses on the destination and the airline now aims to become the ambassador and the guide for the Maltese Archipelago.
Malta is a fantastic country full of colour and vibrancy. We have to sell this. Our rebranding represents the culture, the heritage, the colours and the sense of pride of the people who work and live in Malta far more effectively. Through our new livery we are flying ‘The Pride of Malta’. We have repainted most of the fleet in the new brand and it was exceptionally well received in Malta and overseas.

©: Air Malta – Cedric Galea Pirotta

 

You currently still have ten aircraft and around 1000 employees. That means a lot of employees for each aircraft?
We used to employ over 1200 full time staff. This number has gone down to around 800. During the summer months we are now employing temporary staff to handle the increased workload.
We are continuing to work on improving our processes. When we are profit-making again we plan to expand and we would require more staff.

Your business is very seasonal. Do you plan to store aircraft in the winter season?
Malta also attracts a lot of tourists during the winter. That is a real advantage for us. Of course the number of passengers and flights is lower than in the summer period so we need less capacity. One aircraft has been leased to Sky Airline in Chile for three months each winter for a number of years now. We also do all heavy maintenance checks in winter. That means that only eight of our ten aircraft are flying on our network during the winter season.

You currently have a fleet mix of A319 and A320. Would it be easier to reduce your fleet to just one aircraft type?
That would make no difference for us. The Airbus A319 and Airbus A320 are actually part of the same family of aircraft so there is no problem regarding maintenance, equipment, facilities and crews.

It is quite a long distance from Malta to the UK. Why didn´t you buy the Airbus A321?
It has a much better performance per seat, especially on long routes. We have the option to introduce the Airbus A321 and it would be a great opportunity for us,especially on our routes to Frankfurt, London Heathrow and Brussels.

What are your most important markets?
The UK is the most important market for us. Other important markets include Germany, Italy, France, Switzerland and Russia.

Ryanair is a big competitor for you as well as Monarch. They are both flying on the very popular UK routes. Have you reduced frequencies and routes in the UK market because of their strength?

As part of the restructuring plan we had to reduce capacity on our profitable routes. This was part of the ‘compensatory measures’ we needed to take to be granted approval for the plan by the European Commission.

All in all, how much has total leisure air traffic and your position changed on Malta in the recent years?
The number of visitors has grown considerably and Malta is experiencing record numbers of visitors as well as the air traffic. Our passenger volume today is the same compared with our results a few years ago so we did not lose passengers due to the entrance of low-cost carriers but of course we lost market share.
Our yield is increasing due to the introduction of ancillary revenue. Malta Airport currently handles 3.5 million passengers a year and the number grows by five to six percent per annum.

Another market is the regional market with routes to Italy. Italy is in a big financial crisis. Do you see a big decline in passenger numbers?
Two years ago the number of passengers between Malta and Italy decreased but the market is now growing again. Malta and Italy have very close relations and there are also a lot of holidaymakers traveling on our flights between the countries.
We offer services to Catania, Rome and Milan and we also operate flights between Catania and Munich. Sicily is a very popular route since the two islands offer different attractions and there is significant travel between both islands…

How high is the percentage of business travelers?
10 to 15 percent of our passengers are traveling for business reasons. The percentage of business travelers is varying a lot on our routes. For example on our flights to and from London Heathrow we carry 20 to 30 percent business travelers.

Are you offering a business class product?
We offer a full-service business class on flights to selected destinations like London Heathrow, Amsterdam and Frankfurt. We have different configurations on our flights.

Malta Airport has announced to waive landing charges during the winter period? This might be really good for you because you are flying all-year-round?
We have been in negotiations with the airport operator to establish this charge policy. It is of course a positive step for us.

Will you operate more flights to destinations in North Africa like Libya, which is known for high yields in connection with your broad European network?
We have commenced flights to Libya recently and the yield is encouraging. This summer we also operated services to Algiers. We have plans to extend our network in the area and we are currently looking at Tunis, Casablanca and Cairo.
We also have the opportunity to commence flights to the Middle East or to the Sub-Sahara region. Flights to destinations in countries like Niger, Chad or Mali are not planned.

Do you know why Hi Fly has applied for traffic rights from Malta to New York?
No we don’t.

©: Air Malta – Kurt Arrigo

 

Where do you see Air Malta in a few years?
First we need to be profit-making again. That is our main goal for the future.
Our future also depends on how the country sees itself. We have plans to take advantage of the location of Malta for transfer flights to the regions I already mentioned earlier.
We have no intentions to join an alliance.

Thank you for the interview!

Air Malta – Airline Information

Air Malta – Aircraft and Fleet List

Air Malta – Recent News

Air Malta – Airline Route Network

ch-aviation interview: Transaero – Dimitriy Stolyarov

An interview with Transaero Deputy General Director Dimitriy Stolyarov.

Transaero is the second largest airline in Russia. Privately owned the airline currently operates 95 aircraft with orders in place for the Airbus A380 and the Boeing Dreamliner. In this interview Transaero’s Deputy General Director Dimitriy Stolyarov talks about the challenges running an airline in Russia, the Russian aircraft manufacturers and Transaero’s first Airbus A380 destinations.

This interview was originally published in German by Austrian Aviation Net.

Transaero Deputy General Director Dimitriy Stolyarov ©: Jan Gruber

 

ch-aviation: Transaero is the only operator of the Boeing 747 in Russia. You have also ordered the Airbus A380. What have you done to prepare for its delivery?

Stolyarov: We expect the first A380 to be delivered to the airline in 2015 and I‘m really proud that Transaero will be the first, and so far the only, Russian operator of this type of aircraft. We were also the first Boeing 747 operators in Russia. Our team has already made a lot of efforts to prepare for a successful launch of the A380 services, including crew training.

 

ch-aviation: Have you already made plans as to which destinations will be served by the A380?

Stolyarov: We will operate the A380 on routes with high passenger density. So, it will be used on routes to leisure destinations such as Thailand, Spain or even the United Arab Emirates. We will also operate the A380 on domestic routes including those from Moscow to Vladivostok.

 

ch-aviation: Can you break your passenger traffic down for us in terms of domestic and international traffic?

Solyarov: We currently focus on the international market. About 80 percent of our passenger traffic accounts for international routes and 20% for domestic services.

 

ch-aviation: Who are your main competitors in Russia?

Stolyarov: As we currently serve 190 routes, we have multi-national competition, not just Russian. Aviation is an international business, so the airline competes with different airlines at each particular airport we serve.

 

ch-aviation: Transaero has been a longtime Boeing operator. But, with the introduction of the Airbus A380 you will suddenly begin operating Airbus aircraft for the first time. How does your Airbus A320neo order tie into this?

Stolyarov: Well, currently 95% of aircraft in our fleet are Boeing. However, we’ve considered other alternatives and offers in the market. The airline has required a new aircraft to be ordered and we’ve decided to order the Airbus aircraft. Airbus has made a very good offer, and this is certainly not a deviation in our development.

But, while it makes no difference to passengers whether they travel onboard a new Boeing or Airbus aircraft, there is a marked change for the pilots, who will now have to get accustomed to the Airbus side-stick. And, since we’re set on operating the Airbus A380, it makes sense to introduce the new Airbus A320neo alongside it.

 

ch-aviation: You talk about a good offer from Airbus. Does that mean that pricing was a critical facet of the deal?

Stolyarov: Of course price is important. We’ve agreed on good terms and have got a good offer from Airbus.

 

ch-aviation: Transaero operates three Tupolev 214s in addition to two Tupolev 204 freighters. What is your experience with the aircraft?

Stolyarov: It’s possible to compare the Tupolev 214 with the Boeing 757: Their length, capacity and range are all nearly the same. These aircraft are absolutely safe and meet to the highest international safety requirements. Our Tu-214 aircraft’s interiors were entirely produced in Germany, so from this point of view, there is no difference between the two types. In terms of fuel consumption, the 757 is a bit more efficient.

 

ch-aviation: Do you intend to order further TU-214s?

Stolyarov: We ordered ten Tupolev 214, however the serial production of this type has been stopped.

 

 
Transaero Tupolev Tu-214 ©: Jan Gruber

 

ch-aviation: It seems bizarre that a manufacturer would cease production despite having existing orders…

Stolyarov: If Tupolev had received 100 orders, they would have continued the production. There were simply not enough orders.

 

ch-aviation: Russian aircraft are currently not very popular in Russia not to mention other countries. What, in your opinion, is the biggest obstacle Russian aircraft manufacturers face?

Stolyarov: That’s a very complex question to answer. During the years of the Soviet planned economy, there was no competition among Russian aircraft manufacturers. Aircraft were produced according to a centralised plan, not according to demand. With the fall of communism and the transition to a Free Market economy, however, the manufacturers found they were unable to compete. The production rates were very low and their aircraft were considered outdated and too costly to maintain. As it stands, the Russian aviation industry is slowly learning to become more competitive internationally following years of isolation. This can only come through experience.

 

ch-aviation: The Sukhoi Superjet is a new development from Russia. How many aircraft have you ordered?

Stolyarov: We have six orders with options for a further ten.

 

ch-aviation: The Sukhoi Superjet is comparable to the Embraer 190 and the Bombardier CRJ-1000. Why did you decide to order the Sukhoi Superjet?

Stolyarov: Transaero Airlines is mainly focused on long-haul flights. Through acquisition of the Sukhoi Superjet aircraft the airline has demonstrated its support to the Russian aircraft industry. We currently have no plans to fly regional routes, but we plan to operate the Sukhoi Superjets on short-haul routes, such as from Moscow to St. Petersburg or Kaliningrad. The Embraer 190, in my opinion, is more suited to regional routes.

 

ch-aviation: When will you take delivery of your first Sukhoi Superjet?

Stolyarov: In 2015, or more feasibly in 2016.

 

ch-aviation: Your latest financial results, published a few weeks ago, are really impressive. You are profitable and your revenue has seen strong growth. What makes you so successful?

Stolyrov: The market in Russia is currently growing exceptionally fast. While the global market has a growth rate of four to five percent per year, in Russia we have seen 15 to 17 percent per year. Transaero is ahead of that curve growing around 20 to 25 percent per year. We are very cost-efficient;our fares are based on our costs which we monitor very accurately.

 

 
Transaero Boeing B747-400 at the MRO facility in Moscow Vnukovo ©: Jan Gruber

 

ch-aviation: How are the fuel prices developing in Russia? Is fuel an important cost factor for Transaero?

Stolyarov: Like anywhere else, fuel costs are one of the most important factors to consider in the airline business. Last year the price of jet fuel increased by 20 percent and, unfortunately, it keeps on rising. The price of jet fuel at some Russian airports is actually much higher than at airports abroad.

 

ch-aviation: So does that mean that you are trying to refuel outside Russia?

Stolyarov: In Moscow we have three major international airports where we have the possibility of choosing between jet fuel suppliers. That is to say, the prices charged are internationally competitive. However, at some Russian airports where a single fuel supplier has a monopoly, we can do nothing except pay what they charge. In some cases our airplanes are refueling in stock.

 

ch-aviation: What is the reason why foreign-made aircraft, like Airbus or Boeing, are registered either in Ireland or in Bermuda?

Stolyarov: To begin with, when the first foreign-made aircraft were delivered to Russia, the authorities did not have enough qualified technical personnel to validate their airworthiness. Another point to consider is that Russia is not a signatory to the Cape Town Protocol. Legally-speaking, aircraft here are considered as real estate and are registered and taxed as such.

As a result, leasing companies and aircraft owners have tightened delivery terms applicable to aircraft delivered to Russia. Since international leasing firms do not recognize the Russian aircraft registry or the Russian regulatory authority as being in accordance with Chapter 83 of the Chicago Convention, Russia was forced to sign agreements with both Ireland and Bermuda. The supervision of aircraft is thus split between the two authorities.

Presently, nearly all aircraft manufactured outside Russia but flying in Russia are registered in either Bermuda or Ireland.

 

ch-aviation: How much higher would the costs be to register an aircraft in Russia?

Stolyarov: Costs don‘t matter. Since the registry is not acceptable by the European and US aviation communities of leasing companies, should an aircraft be registered in Russia for even a few months, international authorities would then list that aircraft as uncontrolled. Its records would be interrupted and its value would subsequently depreciate.

While Ireland and Bermuda are both deemed to be “off-shore”, this is in fact a misnomer. The authorities in both countries are very professional and carry out their inspections very stringently.

 

ch-aviation: Russia has an interesting law: airlines have to offer free catering. Is that true?

Stolyarov: That is correct. But there are more like that. Russian carriers have to refund the full flight fare if the passenger cancels his booking 24 hours before departure. Furthermore, passengers are entitled to have free luggage allowance on all flights by law. If a flight is cancelled, airlines have to pay for their taxi, accommodation and food. So as you can plainly see, low-cost carriers have no real chance to exist in Russia working in accordance with these laws.

 

ch-aviation: In Europe it´s common not to get served hot food in economy class. Germanwings and other carriers like WizzAir or easyJet fly to Russia and only offer food for sale. Is the law only valid for Russian carriers?

Stolyarov: Only for Russian airlines.

 

ch-aviation: Your first class is called Imperial Class. What is special about your premium product?

Stolyarov: Imperial Class took quite some years to develop and is constantly being improved. During the economic crisis of 2008/2009, we noticed a trend that people, who used to fly with private jets, were now booking scheduled flights and therefore required a high level of service.

Interior in Imperial Class consists of full-flatbed seats. Every passenger gets their own pajamas and bed linen. Catering is taken care of by Cafe Pushkin; the selection of beverages is lavish and diverse.  Every passenger has a personal manager. Furthermore, the tableware is manufactured by a famous company from St. Petersburg. Every Imperial Class passenger has a limousine service from the city to the airport and vice versa. There is a free airport lounge too. Our feedback has been really good.

 

ch-aviation: How much is an Imperial Class fare, say from Moscow to New York?

Stolyarov: About USD3000 one-way.

 

ch-aviation: Is there high demand for the Imperial Class product?

Stolyarov: The load factors have been really good; feedback as well. On several flights, the class is usually fully booked though the average load factor is 78 percent. A lot of passengers are accustomed to travelling in comfort and are willing and able to pay for it.

 

 
Transaero Imperial Class ©: Jan Gruber

 

ch-aviation: What is the average load factor on Transaero flights generally?

Stolyarov: We have an average load factor of more than 80 percent.

 

ch-aviation: You mentioned that Transaero mainly flies international routes. Was  it originally planned that way when Transaero was founded?

Stolyarov: Transaero was founded on September 30, 1990. Our first flight from Moscow to Tel Aviv took place on November 5, 1991. We always planned to fly international routes for the most part, and our domestic network has only really been developed over the last four years, as before it was not considered important.

 

ch-aviation: Moscow has three major international airports, as you have already told us. Transaero started out from Sheremetyevo and later developed Domodedovo as well. Now a lot of flights also operate out of Vnukovo. Why?

Stolyarov: Transaero uses all three airports though lately we have focused on increasing our presence at Vnukovo. As Domodedovo is not developing as fast as we are, there is not enough capacity there. Vnukovo Terminal A has proven excellent for us, and the airport has enough capacity to boot.

 

ch-aviation: When Russian government aircraft operate into and out of Vnukovo, operations there can grind to a halt for a short while. Has that impacted on your operations?

Stolyarov: Operations really only get interrupted when the President or Prime Minister travel. But neither of them flies that often anyway. Nevertheless, you are correct in that sometimes this does cause minor delays.

 

ch-aviation: Vladimir Putin recently suggested the abolishment of the visa requirement for Russians visiting the European Union and vice versa. Would that improve the Russian-European relations?

Stolyarov: Around 60 countries have abolished their visa requirement for Russia and vice versa. As a result, tourism in those countries, like Turkey, Egypt and China, has increased. The UAE have significantly simplified the visa application procedure. I often meet ambassadors from countries like Italy, Spain, Bulgaria and Greece and I know how happy they would be if the visa requirement was abolished. They could generate a lot of money with additional Russian tourists. While Russia is the biggest country in the world, all embassies are located in Moscow – only a few countries have consulates in cities with more than one million citizens. People in other cities/towns have to travel to Moscow to get a visa before they can travel.  Being very inconvenient, a lot of travelers decide not to visit Europe but instead go to the visa free countries.

 

ch-aviation: Can you imagine why the European Union is so hesitant in that matter?

Stolyarov: I have no idea.

 

ch-aviation: When will you introduce your first Boeing 747-8?

Stolyarov: In 2015.

 

ch-aviation: Thank you for the interview!

This interview was originally published in German by Austrian Aviation Net.

ch-aviation interview: U Htoo Thet Htwe, Air Bagan

An interview with Air Bagan Chairman U Htoo Thet Htwe.

Air Bagan is the first fully privately owned airline of Myanmar and one of the major domestic carriers. The airline commenced operations in 2004 and is a subsidiary of Htoo Trading. Air Bagan currently serves 21 domestic destinations with a fleet of two ATR 42s and two ATR 72s. The average age of the fleet is 20.6 years. In 2007 the airline commenced international flights to several Asian destinations. Nearly all services were dropped later. Currently the only international destination is Chiang Mai.

The company has a lot of private and government-owned competitors. Since the political changes in Myanmar a lot of new start-up carriers have been launched in the country.

ch-aviation: Air Bagan commenced operations in 2004 as the first fully privately owned airline in Myanmar. What were your main challenges during start-up and within the first years of operation?

U Htoo Thet Htwe: When we started, scarcity of human resources was the biggest challenge we came across. Pilots, engineers, qualified and competent employees. Another difficulty encountered was in selecting and restricting to one aircraft type operation.

ch-aviation: How would you describe your initial business model and the competitive situation in the domestic market at the time you launched?

U Htoo Thet Htwe: Air Bagan was established as a full-service carrier, which focuses on safety first and provide exceptional services to our customers. As we aim to develop the tourism and air transport industry in Myanmar, our business model did not solely concentrate on profits initially. For instances, we operated to remote areas in the country to fulfill the transport requirement of our local people.

The competition was not very high in the domestic market at the time Air Bagan was launched. Within short periods, most people were aware of and became loyal to our brand. We became the market leader with as much as 31% market share in 2008.

ch-aviation: Were there any major problems for you as an airline because of international sanctions, which have fortunately been lifted now?

U Htoo Thet Htwe: The payment transaction was the major problem. But we still could manage to overcome the obstacles.

ch-aviation: In 2007 Air Bagan commenced international operations. Why were all scheduled international destinations except Chiang Mai dropped again?

U Htoo Thet Htwe: In 2007, Air Bagan operated scheduled flights to Bangkok and Singapore, which are among many other scheduled and chartered flights regionally. We suspended our international operations due to the unfavorable political and economic reasons in 2007. Money transaction was huge impact on international operations when the economic sanction was imposed on us after 2007 monk protest. But we are currently successfully operating our flights between Chiang Mai and Yangon.

ch-aviation: More and more international carriers are starting flights to Myanmar or are increasing frequencies. Do you have plans to restart more international operations again yourself? What markets would be of interest to you?

U Htoo Thet Htwe: Our strategy is to focus on domestic operations while to be boutique in terms of international by offering full services and operation to niche markets. We will continue operating between Chiang MaiYangon, and we have a plan to launch Chiang Mai-Mandalay operation in this season.

ch-aviation: Since 2010, when the government made major policy changes, a lot of new carriers have commenced operations. Is this a problem for you and other established carriers or does the passenger growth cover this leaving enough room for everyone?

U Htoo Thet Htwe: According to Air Bagan’s internal market research, there was an increase of 48% domestic travelers in the year 2011-12 from previous year, but only 5.4% increase in 2012-13. And since 2010, there are a lot of new carriers in the market with addition of fleets. Hence, passenger growth, though higher now, is still inadequate to beneficially split among all old and new carriers due to insufficient hotel accommodation and other infrastructures needed to attract more tourists to come into the country.

ch-aviation: What were other major changes you could observe in the domestic market following the major governmental policy changes?

U Htoo Thet Htwe: All international destinations were through Yangon, so domestic carriers transported all of Myanmar’s international passengers to and from Yangon. Now with opening up of Mandalay to international carriers, domestic carriers lose all their Mandalay/Yangon and Yangon/Mandalay international passengers. However, there are positive changes to our airline industry too. For example, Japan Aids on air navigation facility to improve safety standard. More insurance brokers are coming to the market and the insurance premium rate is going down. Near future, we expect that we enable to choose fuel suppliers as the government policy has changed to opened market.

ch-aviation: What do you think of the start-up Golden Myanmar Airlines, the first low-cost carrier in your country? Will they be successful competing against MAI and LCCs from other ASEAN nations?

U Htoo Thet Htwe: Currently, the infrastructure in Myanmar is not “low-cost friendly” or perfect for low cost carrier. For instance, we have high fuel price, lack of state-of-the-art airport infrastructures, and limited resources, in-house training centers, etc. which are all important factors for successfully operating a low cost model.

ch-aviation: Myanmar has currently a high number of domestic and regional carriers, mostly operating with a fairly small fleet. Air KBZ and Air Mandalay have now started limited cooperation. Do you have any similar plans and are you considering mergers or acquisitions to get better economies of scale?

U Htoo Thet Htwe: We currently have code share flights with Asian Wings for some domestic destinations. And due to the limited resources in the country, it is very important for the domestic carriers to have access to shared resources in order get better economies of scale.

ch-aviation: All in all, do you expect that Air Bagan will be able to participate in the market growth and what do you think makes you better prepared as one of the well-established local players?

U Htoo Thet Htwe: We will try to maintain our position of a strong player in the market by strengthening our fleet and most importantly human resources and systems in the coming years. We are still ahead of many local players in terms of being the only domestic airline in Myanmar using computer reservation systems, e-ticketing and global distribution systems. As we invest a lot in training and professional development of our employees, we are confident and well-prepped for upcoming exciting opportunities.

ch-aviation: What is your current customer mix? Do you see more business travelers or more private customers on your flights? Has the number of foreign tourists using your services increased significantly?

U Htoo Thet Htwe: It’s a mix of tourist and local. But we can see our share for the tourists market is growing every year. In 2012-13 it’s a ratio of 56:44.

ch-aviation: Your fleet of two ATR42-300s, one ATR72-212, one ATR72-500 and one Fokker 100 is not really young with an average age of approximately 20 years according to our (ch-aviation) data. Are there any concrete plans yet for a replacement and do you expect to place orders for new aircraft or will you continue to prefer used aircraft?

U Htoo Thet Htwe: Safety has always been the first priority in our organization. All our aircrafts are very well-maintained and being operated according to the rules and regulations. In order to reflect our commitment for safety and uplifting brand image, we are in the process of acquiring some more ATR-72-500 aircrafts to replace/add into our fleet.

ch-aviation: There are plans to build a second airport for Yangon. Do you support these plans or would you be happier withan expansion of the existing airport?

U Htoo Thet Htwe: We prefer the expansion of existing airport. Not only Yangon Airport, but also most of domestic airports must be extended.

ch-aviation: Looking to the future, where do you see Air Bagan in five years?

U Htoo Thet Htwe: Following the recent openings in the country, Air Bagan definitely sees a lot of opportunities in the aviation industry. Nevertheless, it is very important to be in a competitive position with the other international airlines and increasing local players in the coming years.

We see ourselves as a very poised boutique airline, representing Myanmar Identity in the international community while the most networked, reliable and strong domestic airline in Myanmar.

ch-aviation: Thank you for the interview!