With only one domestic airline, Angkor Air, Cambodia is the most underserved market in Southeast Asia, along with Myanmar, according to the Centre for Aviation. Photograph: Vireak Mai/Phnom Penh Post |
21 January 2013
By Low Wei Xiang and Daniel de Carteret
The Phnom Penh Post
Anti-competitive behaviour in Cambodia’s domestic airline industry is limiting its growth, with the relevant authorities “reluctant” to open the domestic market up to competition, an aviation report found.
Monopolising this market currently is the country’s flagship carrier, Cambodia Angkor Air, according to a Centre for Aviation report released last Friday.
This has led to “high fares” and caused domestic air travel to shrink by about 15 per cent since 2008, when there were about 170,000 domestic passengers.
“The lack of competition in Cambodia’s domestic market is a dampener to growth, particularly at Sihanoukville,” the report wrote.
For one, Sihanoukville’s “unspoiled beaches” need better domestic
connectivity with Angkor Wat so that visitors will combine these two
attractions, “instead of with the beaches of Thailand.”
But Cambodia Angkor Air, currently the only airline flying the direct
Sihanoukville-Siem Reap route, “has been reluctant to add capacity” to
the route.
Angkor Air’s website shows only three flights a week from Siem Reap to
Sihanoukville and back, even though some flights in late February are
fully booked.
The report alleged that Angkor Air’s “reluctance to expand at
Sihanoukville” could be because the carrier is controlled by Vietnam
Airlines.
The company owns 49 per cent of Cambodia Angkor Air, which was launched
in 2009 as a joint venture with the Cambodian government.
Thus, the move is seen by some “to favour Phu Quoc, a Vietnamese island
near the Cambodia airport that just opened a new international airport
and has similar ambitions to become a major tourist destination.”
Calls to Angkor Air and the Ministry of Tourism yesterday were not answered.
If Cambodia’s domestic market had higher competition and lower fares, local demand would also be “stimulated”, said the report.
“Only a small fraction of Cambodians have sufficient discretionary
income to afford flying. But the country’s economy is growing and, most
importantly, its tourism industry has big growth potential,” the report
added.
But because “the market may not be big enough to support a second local
scheduled carrier”, an alternative is to allow foreign carriers to enter
the domestic market.
Yet, “Cambodian authorities have so far been reluctant to let foreign carriers enter the domestic market,” the report alleged.
“Some foreign carriers such as Jetstar Asia and SilkAir already operate
between Phnom Penh and Siem Reap as part of their international flights
to Phnom Penh and Siem Reap but are unable to pick up domestic
passengers,” the report added.
Chan Sophal, president of the Cambodia Economic Association, agreed that low-cost carriers would boost domestic travel.
“As long as the low-cost airlines are efficient and have a low risk of failure, it is very good for the economy,” he said.
But he believes that while the “high fares” cited in the report may have
caused domestic air travel to shrink, other factors may have come into
play too. With Cambodia’s road systems improving, “perhaps travel is now
easier by road,” he said.
Cambodia’s three airports served more than 4.3 million passengers in
2012. However, it remains “the most under-served market in Southeast
Asia”, along with Myanmar, said the aviation report.
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