Monday, January 28, 2013

Air Bagan Fokker 100 XY-AGC: Crash probe in the spotlight; Accident occurred December 25, 2012 in Myanmar

A Department of Civil Aviation investigation into the cause of the tragic Christmas Day Air Bagan crash, which left two people dead, represents a fresh test of Myanmar’s reforms, as potential investors wait to see just how thorough regulators will be.

“The crash is a tragedy...but this could be a good opportunity for the DCA and the MOT (Ministry of Transport) to show the world that they are concerned about transparency and safety,” said Mr Dominique Savariau, an aviation expert at Myanmar Carlton Consulting in Yangon.

The government responded to the crash, which also left 11 people injured, by forming a four-member investigation team on December 26. The team is led by U Win Swe Tun, a deputy director general at the DCA.

Although Myanmar has undertaken a number of important political and economic reforms over the past two years, these have done little to change perceptions about the extent of corruption.

In its 2012 corruption index released in late 2012, Transparency International placed Myanmar 172nd out of 176 countries surveyed. While the index is not without its critics – there are questions over the timing and extent of research for Myanmar’s ranking – many foreign investors are still wary of the risks of doing business in Myanmar.

“Most of the industries in Myanmar belong to ex-military workers or close friends of the military,” said Mr Rahul Ghosh, the Singapore-based head of Asia Research for Business Monitor International (BMI) and editor of the firm’s report, Myanmar Awakens. “There’s a lack of competition” that turns off potential investors, he said.

Air Bagan is one of several companies owned by tycoon U Tay Za, an entrepreneur infamous for his close ties to the former military regime. Despite many Western countries lifting sanctions over the past year, U Tay Za, a number of his companies and most immediate family members and associates remain blacklisted from doing business with firms from the United States. European Union sanctions that were suspended for one year in April 2012 also remain in place.

The investigation is seen by some as a test of the government’s commitment to transparency. One concern expressed by sources familiar with the industry is that the upper echelons of both Air Bagan and the Department of Civil Aviation are largely drawn from Myanmar’s Air Force. Observers remain skeptical about how much information the investigation team will reveal – particularly if those results are bad for Air Bagan.

“It is hard to say whether Air Bagan would be duly punished if it is found to have made egregious errors regarding the Christmas Day accident in Heho. Tay Za undoubtedly continues to enjoy a close connection with powerful government officials,” said Mr Andrew Wood, an Asia analyst for BMI and co-author of Myanmar Awakens. “On the surface, the incident appears to be a confluence of factors, ranging from a lack of technology at the Heho airport to a potential lack of training and, lastly, an aged jet – all issues that are likely to be relatively widespread in the Myanmar aviation industry. It is unlikely then that the government will mete out any sort of crippling punishment.”

Mr Savariau, however, expressed optimism that the investigation will yield honest, open results, if only to attract investors to the industry. “The government wants foreign airlines and foreign insurance companies to do business [with them],” he said. An honest investigation “will create confidence, even if it’s painful”, he said.

Mr Leithen Francis, who has been covering aviation in Southeast Asia since 2003 as an editor for Aviation Week magazine, said there could be divisions in the government over how to handle the investigation and its findings. “The Myanmar government does have a vested interest in protecting Myanmar airlines, especially the ones that are partly owned by the government. That said, the government doesn’t want to just support Myanmar airlines,” he said.

He said the government appeared eager for more foreign business, adding that it also has “a good record of investigating crashes”.

A joint delegation from the DCA and Air Bagan is in Canberra, Australia, using facilities at the Australian Transport Safety Bureau to sift through data from the flight’s black box data recorder. Neither the airline or DCA could be reached for comment on the progress or nature of their collaboration but Mr Julian Walsh, general manager for strategic capability at the bureau, said it was not uncommon for airlines and government officials to work together to investigate accidents.


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