Mandalay International Airport will receive an upgrade after two Japanese firms and a Myanmar-focused company signed a 30-year concession agreement to operate and rehabilitate the airport.
Japan’s Jalux and Mitsubishi Corporation and a subsidiary of Yoma Strategic Holdings Ltd inked a deal on November 17 to take over management of the airport in Myanmar’s second-largest city, though the agreement will take effect in March 2015.
Jalux and Mitsubishi each own 45.5 percent of the venture, while Yoma owns the remaining 9pc.
The airport’s upgrades will cost US$100 million, and are aimed at promoting direct transportation of goods to other countries in Asia and Europe, said U Win Swe Thu, director general of the Department of Civil Aviation. Details were not immediately released about the financing arrangements.
The agreement was signed by U Win Swe Tun and Jalux director Takao Suzuki.
“The project makes history as the first in which Japanese companies are involved in one hundred percent private equity airport operations abroad,” Jalux said in a press release.
The firm also operates the international terminals of Vientiane’s Wattay International Airport, as well as a number of others in Japan.
Mandalay International Airport opened in 2000. The terminal has the capacity to handle 1000 passenger arrivals and 1000 departures per hour, totalling up to 3 million per year. With expansion that could be raised to 15 million passengers a year.
While there are more international flights to Mandalay, it has not seen the surge that that Yangon has experienced – though interest in the airport is building. Currently Bangkok Airways, Silk Air, Golden Myanmar, Air Asia, China Eastern Airlines and Myanmar Airways International all operate regional flights connecting Mandalay to Bangkok, Singapore, Kunming in China and Gaya in India.
Businesspeople said the northern airport has lots of potential, if upgrades continue as planned.
Daw Aye Mra Tha, general manager for Myanmar Airways International, said the airline would like to add cargo aircraft flights to the airport once it is upgraded.
“This part of our future plans depends on the upgrades,” she said. “Currently we only have cargo services to and from Guangzhou in southern China [from Mandalay].”
Myanmar’s current distribution hub is Yangon, though this could change in the future, said Akash Chandra, director of importer-exporter DPULSACE Private Limited, based in Singapore.
“I see lots of potential for fruits and vegetable exports for the areas near Myanmar,” he said. “There is potential but it depends on how Myanmar operates [the airport].”
The Mandalay tender was one of three awarded in August last year. The other two tenders were for upgrading and running Yangon International Airport, as well as building and operating the large $1.4 billion Hanthawaddy Airport slated for Bago Region.
While Jalux, Mitsubishi and Yoma have remained the preferred bidders for Mandalay, talks with the initial preferred bidders of Hanthawaddy, a consortium led by South Korea’s Incheon International Airport Corporation, fell apart in early 2014. Eventually Singapore’s Yongnam Holdings won a second round of bidding.