With most international carriers resorting to cost cutting measures in the wake of

the September 11 terrorist attacks, the agency responsible for expanding and managing

Phnom Penh's Pochentong Airport has found it difficult to lease the plush new business

lounge facilities to any airline.

As a result, the VIP lounge recently completed by the French firm Cambodian Airports'

Management Services (CAMS) as part of the airport's modernization project is lying

unoccupied.

"It's really troubling for us as we try to put in place modern infrastructure

and facilities to upgrade the airport to international standards," said a senior

company official. "We hope the situation will eventually improve and the airlines

will come forward."

Bunluasak Samargasevi, sales manager of Thai Airways, said that cost was the real

reason behind the stalled negotiations between CAMS and the Airline Operators' Committee.

"As a part of the worldwide Star Alliance, we have to provide lounge services

wherever we fly. But CAMS is demanding $10 per head for the use of its lounge, which

includes only a welcome soft drink for our passengers," he said.

"We are ready to pay only $6 per user, [which should provide] basic facilities

like television, newspapers and magazines and a free flow of soft drinks. For us,

it's not a question of cost alone but the product or service that we are getting

for that cost."

Samargasevi hoped that the airlines and CAMS would soon reach an agreement, so that

the lounge facilities could be put to use.

Business-class clients typically generate far higher profits than economy class passengers,

and business lounges are seen by the industry as a way of holding on to this custom.

Another factor cramping demand for the new lounges at Pochentong Airport, said airline

officials, was that Phnom Penh is not a transit point in the same way as other capital

cities. Passengers waiting for a connecting flight find it quicker and easier to

go to a downtown hotel rather than spend time waiting in a business lounge.

The CAMS official said his organization had offered to share the VIP lounge with

any of the leading airlines. At the same time CAMS is in the process of building

several other lounges in the upcoming international terminal that will be offered

to individual airlines for a regular fee. There is also a plan to build a common

lounge for smaller airlines which cannot afford individual facilities.

Cambodia is currently serviced by at least 11 international airlines, including Thai

Airways, Silk Airways, Bangkok Airways and China Southern, none of which has a lounge

here. In a further cost-saving measure, some airlines said they also wanted to opt

out of the computerized check-in system, which will be installed soon.

"To avoid paying the extra fee the airlines, including some big operators, have

asked if they can still continue to use the old manual check-in system," the

CAMS official said.

CAMS signed a concession agreement in 1995 with the Cambodian government under which

it must invest $110 million for the modernization, expansion, maintenance and management

of airport services until 2020. The company claims to have already spent $75 million.

A similar concession for Siem Riep airport requires CAMS to invest another $25 million

until 2005. New terminals, business lounges and computerized check-in are all part

of the deal.