The first phase of a new airport terminal in Yangon opens: it will be capable of hosting up to 200 million passengers per year when it is complete, and US fast-food chain Kentucky Fried Chicken (KFC) has become the first international restaurant to open i

17 Mar 2016

Asia World Group has opened the first phase of a new airport terminal in Yangon that will be capable of handing up to 20 million passengers a year when complete, with US fast-food chain Kentucky Fried Chicken the first international restaurant confirmed to open in the new space.

Yangon Aerodrome Company Limited (YACL), an Asia World subsidiary, built the airport in less than two years, completing the project in time to be claimed as one of the final achievements of the outgoing administration. U TheinSein opened the terminal, which will be known as T1, on March 12, in one of his last public appearances as president as his five-year term draws to a close.

Myanmar Airways International, the recently rebranded national carrier, will be the first to move into the new terminal, officials said, with the airline’s maiden departure scheduled for March 20.

Yangon’s existing international terminal, which is also managed by Asia World Group, will be rebranded as Terminal 2. Work on a new domestic terminal has already begun and plans are being drawn up for an “airport city” comprising a cultural centre, hotels, commercial and retail space.

US-blacklisted Asia World was awarded a contract to build the US$660 million project in 2013 in controversial circumstances – the tender committee did not award it the highest mark, favouring a bid by a Japanese consortium, asreported last year by The Wall Street Journal.

In response to a question about the tendering process, project manager Jerzy Wilk told The Myanmar Times that the company had no influence over the DCA’s decision-making, and that the tender was carried out in the public domain. The company’s track record demonstrates its capability, he said.

YACL was awarded the contract in 2013 and signed a concession agreement with the Department of Civil Aviation in 2015. The group has provided 100 percent of the funding, through equity and loans from banks, said MrWilk.

YACL chair U HtunMyintNaing, who also goes by the name Steven Law, said in a speech on March 12 that in building the airport the company had been confronted with several challenges.

“First, as everybody is aware, this is not a greenfield project. It is an in-operation project and we needed to carefully deliver during this period,” he said.

“Another challenge is our airport is a city airport, so we had a lot of limitations in the master plan and design … [Also] we built all these things within a short time period.”

The company is operating with limited space – much of the land around the airport is taken up with military compounds and golf courses. Singapore’s CPG Corporation, which designed the world-class Singapore Changi Airport, helped with the design and planning, as did Surbana, said Mr Law in his speech.

Around 88pc of flights into Myanmar land in Yangon. The airport has seen passenger numbers rise from 1.99 million in 2010 to 4.68 million in 2015, according to literature distributed by YACL.

Weekly international flights from Yangon increased 3.88 times between 2010 and 2015. Twenty-eight international airlines now fly into Yangon and several more have confirmed new routes – Emirates Airlines, for example, will begin daily flights to Dubai in August and Hong Kong Express will launch flights later this year.

YACL targets 8 million international arrivals through the airport in three years, according to YACL’s chief operating officer, Sulaiman ZainulAbidin.

Last May, Singapore Myanmar Investco signed a 10-year agreement with DFS Group to develop and operate duty-free retail outlets at Yangon and Nay Pyi Taw airports and the company will be responsible for bringing in international brands.

A tender has been called for the 7800 square metres of retail space with 50 retail outlets, and 3400 sq m of space across 16 restaurants. KFC has already set up its restaurant on the airport’s ground floor, and plans to open from the end of this month, said MrAbidin.

While Asia World Group and Mr Law are on the US Specially Designated Nationals list, YACL is not. Company officials did not explain how KFC has been able to sign with the group, and KFC’s local partner Yoma Strategic had not responded to questions by press time.

Asked whether US sanctions had an impact on international demand to open outlets in the new terminal, MrAbidin said it had not. “We conducted a tender. So far the response is from almost any country you can find … I don’t see any problems.”

Despite the sanctions link, international trade will be able to pass freely through the airport, under the US Treasury’s General Licence 20, issued in December. While the license is only valid for six months, it is widely expected to be renewed in June.

Mr Law has benefited more than most sanctioned companies from the license, which also allows trade to pass through his Yangon port terminal.

The license is aimed at promoting trade and does not cover business deals between Asia World and US companies beyond transactions “ordinarily incident” to trade, officials from the Office of Foreign Assets Control said on a media call last December.

 Reference: http://www.mmtimes.com/index.php/business/19447-asia-world-opens-new-yangon-airport-terminal.html