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” short-haul 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.