It’s tough, kid, but it’s life

As you would expect, this growth has prompted a stampede of airline hopefuls applying for licences to launch flights. The leading players currently are Cambodia Angkor Air (4 A320, one A321 and 3 ATR 72) and Sky Angkor (7 A320 and 2 A321) but Chinese-backed JC International Airlines, an ambitious start-up that entered the market last March with 5 A320, is expected to become the largest operator in terms of fleet size by years end. On the sidelines are at least four more proposed carriers trying to get in on the act.

According to Sinn Sereyvutha, spokesman for the State Secretariat of Civil Aviation, Prince International Airlines, MJ International Airlines, Air Siem Reap, and Cambodia Airways have all applied for licences but are still waiting for a green light to fly.

“These companies have been interested in the local aviation market since last year, but it takes time to process their applications. Sometimes, it takes up to six months. Also, some of these companies have not been able to meet some of our requirements. For example, each airline must inject US$20 to $30 million in their business during the first three years, not including aircraft, and is required to employ at least 100 staff. When they become active in our market, they will create a lot of jobs and bring new technology,” he said.

That sounds fine but the real question is: can Cambodia actually support 10 or 11 local operators? Tourism is certainly booming, with some six million foreign visitors arriving each year on scheduled flights operated by 43 international carriers. These travelers contribute some $3.5 billion of economic activity, or about 13 per cent of Cambodia’s economy.Cambodia Airports says traffic at the Kingdom’s three international airports – Phnom Penh, Siem Reap and Sihanoukville – is rising by 25 per cent year-on-year.

‘Can Cambodia actually support 10 or 11 local operators?’

The main draw, of course, is Siem Reap and its 12th century Angkor Thom royal city, though for those with a leaning towards the darker side of tourism, Cambodia’s so-called “Killing Fields” have also become a huge draw. These include a number of sites around the country where collectively more than a million people were killed and buried by the Communist Khmer Rouge regime, during its rule of the country from 1975 to 1979.

Local aviation authorities believe the strong growth in air traffic will continue at its current pace as long as the country maintains its political and economic stability. Airport officials also think expansion being undertaken at the Kingdom’s airports should be sufficient to handle the growth. Speaking to the Phnom Penh Post newspaper recently, Ho Vandy, secretary-general of the Cambodia National Tourism Alliance, said Cambodia’s airports were well positioned to leverage the region’s high rate of growth to develop its aviation and tourism sectors.

“Looking at the overall scope of regional growth, the percentages for air travel continue to increase. Additionally, we have seen an increase of short-term visitors that are benefitting from a highly competitive regional market that provides flights at reasonable costs.”

And Nuno Costa, marketing and sales director at French-run Cambodia Airports, said the country was benefitting from the robust growth of the Asia-Pacific aviation market as this was its main source of passenger air traffic. He said there were still “huge” opportunities to leverage this growth with more flight connections.

“There is a huge potential from unserved markets such as Australia, India and Russia, and underserved markets such as Japan, Philippines and China.”

The airports say they are committed to opening up new linkages and its strategy is to diversify connectivity and generate more traffic by attracting more airlines and opening up new routes that operate more frequently. Whether local airlines, including the proposed start-ups, can handle the competition, both within their own market and from the increasing capacity being thrown in by foreign carriers, is another matter.

As CAPA puts it in its report: “Cambodia’s fleet will continue to expand rapidly over the next few years as passenger traffic grows rapidly, driven to a large extent by inbound demand from China.”

But given Cambodia’s relatively small market, the report also warns that “it is hard to imagine a market the size of Cambodia supporting more than five airlines – let alone 10 – over the long run.”

All in all, while Cambodia’s airline sector is set to see several newcomers take to the skies, it is likely a few of them will eventually come to grief.