More air­lines to vie for crowded skies

The Phnom Penh Post - - BUSINESS - Cam McGrath and Cheng Sokhorng

AT LEAST five new pas­sen­ger air­lines are pre­par­ing to launch Cam­bo­dia-based op­er­a­tions within the next year, ef­fec­tively dou­bling the num­ber of lo­cal car­ri­ers and rais­ing the level of com­pe­ti­tion on do­mes­tic and in­ter­na­tional routes.

The new air­lines have ap­plied for air op­er­a­tor’s cer­tifi­cates (AOC), with one al­ready re­ceiv­ing ap­proval and four more ex­pected to be awarded within the com­ing year, Sinn Chanserey Vutha, spokesman of the State Sec­re­tar­iat of Civil Avi­a­tion (SSCA), said yes­ter­day.

He said seven air­lines are cur­rently li­censed for op­er­a­tions in Cam­bo­dia, with two of the new air op­er­a­tor’s cer­tifi­cates (AOC) is­sued in re­cent months to JC In­ter­na­tional Air­lines and Lan­mei Air­lines, while Small Planet Air­lines was awarded an AOC but has yet to com­mence ser­vice. Ad­di­tional li­cences are in the pipe­line for KC In­ter­na­tional Air­line, Air Siem Reap, Prince In­ter­na­tional Air­lines and Cam­bo­dia Air­ways.

“We will com­plete the AOC for KC In­ter­na­tional Air­lines early next year then con­tinue to is­sue the rest over the course of the year,” he said.

Ear­lier this month, the SSCA granted an AOC to Small Planet Air­lines, al­low­ing the Lithua­nian-based leisure air­line to op­er­ate flights from its new re­gional hub in Cam­bo­dia. The air­line, which op­er­ates char­ter flights to coastal re­sorts in the Mediter­ranean re­gion from hubs in Lithua­nia, Poland and Ger­many, will use its new Cam­bo­dian base to over­come the chal­lenges of sea­son­al­ity in Europe by repo­si­tion­ing some of its fleet here dur­ing the Euro­pean win­ter low sea­son.

Erikas Zubrus, CEO of Small Planet Air­lines Cam­bo­dia, said the air­line will ini­tially look to serve the Hong Kong, China and South Korean mar­kets, while it has also ap­plied for ap­provals to serve Thai­land, Ja­pan and islands in the Pa­cific re­gion.

“As for now, we have one air­craft reg­is­tered in Cam­bo­dia, and it has com­pleted its first test-flight suc­cess­fully,” he said. “We plan to ex­pand our Cam­bo­dian fleet to three air­craft this win­ter and six air­craft in the up­com­ing two years.”

KC In­ter­na­tional Air­lines is the first air­line in the queue for up­com­ing AOC ap­proval. The air­line startup, a $100 mil­lion Chi­nese-Cam­bo­dian joint ven­ture with ties to the rul­ing party, ex­pects to launch ser­vice early next year to tap into the lu­cra­tive Chi­nese travel mar­ket.

Vong Kong Leng, the air­line’s di­rec­tor of ad­min­is­tra­tion and hu­man re­sources, said the new air­line will lever­age its Chi­nese di­rec­tor’s 15 years of ex­pe­ri­ence in the avi­a­tion busi­ness to fill a niche in the lo­cal mar­ket.

“We plan to launch in Jan­uary and even though there are a lot of car­ri­ers com­pet­ing in the avi­a­tion mar­ket it is still an op­por­tu­nity for us be­cause our strat­egy will be to op­er­ate to un­der­served des­ti­na­tions,” he said.

Ini­tial des­ti­na­tions are likely to in­clude the Chi­nese cities of Bei­jing, Guangzhou, Shang­hai, Hong Kong, Ma­cau and Xin­jiang. The air­line is still mulling whether to op­er­ate Boe­ing or Air­bus air­craft on the routes.

Prince In­ter­na­tional Air­lines and its sis­ter air­line Cam­bo­dia Air­ways have also ap­plied for AOCs and ex­pect to com­mence com­mer­cial op­er­a­tions in early 2018. The two air­lines, a project of the Chi­nese in­vestors be­hind Prince Real Es­tate, are headed by a for­mer ex­ec­u­tive of Cam­bo­dia Bayon Air­lines and will look to con­vert their board’s con­nec­tions with Chi­nese travel agen­cies into ticket sales.

Ac­cord­ing to the com­pany, PIA aims to launch with three A320 air­craft to serve the tourism char­ter mar­ket and two Gulf­stream jets for lo­cal busi­ness clients.

Cam­bo­dia Air­ways has set plans to op­er­ate 10 Air­bus 320s and two A330s within the next five years. The air­line is ex­pected to op­er­ate sched­uled flights to Ja­pan, South Korea and Asean coun­tries, as well as in­ter­na­tional routes to Europe and Asia.

Air Siem Reap, a joint ven­ture between Thai “boutique” short­haul car­rier Bangkok Air­ways and Cam­bo­dian ty­coon and rul­ing party Se­na­tor Ly Yong Phat, has ap­plied to op­er­ate flights out of Siem Reap In­ter­na­tional Air­port. No fur­ther de­tails were avail­able as of press time.

The new air­lines will tighten com­pe­ti­tion in Cam­bo­dia’s in­creas­ingly crowded air space where over 40 com­mer­cial air­lines op­er­ate sched­uled flights. They could also put more pres­sure on lo­cally reg­is­tered car­ri­ers, par­tic­u­larly those that op­er­ate do­mes­tic ser­vices.

Cam­bo­dia has a rep­u­ta­tion as one of the eas­i­est mar­kets for startup air­lines to ob­tain an AOC and has been par­tic­u­larly at­trac­tive to op­er­a­tors tar­get­ing the high-growth Chi­nese mar­ket. Yet the King­dom has proven a chal­leng­ing mar­ket, with a list of over 30 now-de­funct air­lines. The most re­cent was Ap­sara In­ter­na­tional Air, which launched in Oc­to­ber 2014 but within weeks had moth­balled its sole Air­bus 320 af­ter in­cur­ring huge losses in a price war with other do­mes­tic car­ri­ers.

In a re­port is­sued ear­lier this year, Aus­tralia-based avi­a­tion re­search and con­sult­ing firm the Cen­tre for Avi­a­tion (CAPA) warned that startup air­lines could face se­vere head­winds in Cam­bo­dia’s al­ready over­sat­u­rated avi­a­tion mar­ket. It said the ex­ist­ing lo­cal car­ri­ers – which at the time com­prised Cam­bo­dia Angkor Air, Sky Angkor Air­lines, Cam­bo­dia Bayon Air­lines and Bas­saka Air – had all set their ex­pan­sion hopes on China but lacked the scale and re­sources to com­pete with for­eign car­ri­ers on th­ese routes, or each other.

“Cam­bo­dia may not be able to sup­port more than four lo­cal air­lines over the long term,” it said. “The four ex­ist­ing air­lines, none of which op­er­ate more than seven air­craft, lack the scale to com­pete ef­fec­tively with for­eign air­lines, and the pro­posed star­tups will face sim­i­lar chal­lenges if they suc­ceed at launch­ing ser­vices.”

Yet SSCA’s Vutha said Cam­bo­dia’s avi­a­tion reg­u­la­tor had no in­ten­tion of cap­ping the num­ber of AOCs, though it could place re­stric­tions on route per­mits.

“We ex­pect more air­lines to op­er­ate in Cam­bo­dia’s avi­a­tion mar­ket as there is no rule lim­it­ing the num­ber of air­lines that can op­er­ate here,” he said yes­ter­day. “This is a free mar­ket and it is pos­si­ble to see some air­lines ap­pear and oth­ers dis­ap­pear, though we might con­sider lim­it­ing ap­provals on routes to the var­i­ous car­ri­ers if there are no park­ing slots [at air­ports] avail­able.”

Vutha added that with Cam­bo­dia’s tourism sec­tor grow­ing rapidly com­pe­ti­tion in the avi­a­tion sec­tor was in the best in­ter­est of air pas­sen­gers.

“The more air­lines we have the more com­pe­ti­tion there will be, which will bring lower prices and higher qual­ity ser­vice to the avi­a­tion mar­ket,” he said.

HOWES SCOTT

Pas­sen­gers board a Bas­saka Air flight to Ph­nom Penh from Siem Reap In­ter­na­tional Air­port last year.

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