by Violet Cho, The Irrawaddy, 25 Oct 2007

Air Bagan Ltd has announced it will suspend flights to Singapore, as of November 4, citing the effects of economic sanctions against the airline’s owner, businessman Tay Za.

A letter signed by the airline’s sales and marketing manager said “the final blow” came when the company was informed by its Singapore bank that “they will no longer deal with us for the time being.”

“Sanctions have been imposed on our airline and also our parent company in Singapore. This has indeed caused us a lot of pain and anguish, as with these sanctions we now have no access to aircraft spare parts,” the letter said. “We are now facing some major obstacles that need to be dealt with in the next few months.”

Air Bagan began flights to Singapore last month, during massive civil unrest in Burma when the military regime suppressed pro-democracy demonstrations.

Observes close to Air Bagan said the suspension of flights could last as long as six months.

Air Bagan currently flies internationally from Rangoon to Bangkok. Its Web site says it plans to fly to Kunming and Siem Reap in Cambodia, but no date for the start of the service was provided.

Tay Za, a wealthy businessman in Burma, is closely associated with the ruling generals. He started the private airline about three years ago.

Sanctions were the main reason cited for the suspension of the airline, according to the letter. The US imposed additional sanctions against the Burmese military government on October 19, including freezing the bank accounts of an additional 25 military officials and 12 businessmen or business entities closely associated with the military regime.

“More passengers and travelers refuse to use Air Bagan now,” a travel agent with Sinmyanmar, based in Singapore, told The Irrawaddy. “We have stopped taking responsibilities for the sale of tickets for Air Bagan.”

With the new sanctions, the company apparently found it impossible to do business in Singapore. Some observers said companies affected by the sanctions may try to do business with banks in Kuala Lumpur and Dubai.

Bagan Airlines launched flights to Singapore in September, with a promotional 14-day roundtrip flight between Rangoon and Singapore for US $223 and a 14-day return ticket between Rangoon and Bangkok for $129. Its airfares were about $50 cheaper than other airlines.