Airline Industry Finds Recovery Is Slow Going

Even as visitor arrivals to Cambo­dia increase following 2009’s recession, growth in the airline industry remains below levels prior to the economic crisis.

Airlines say per-flight passenger levels are on a par with last year, when Cam­bodia’s economy contracted by about 2 percent and airline companies, experiencing a sharp downturn in business, were forced to launch promotional airfares to keep passengers.

According to figures from the Min­istry of Tourism, air arrivals to Cambodia in the first eight months of the year increased by 14.2 percent to 834,716 people.

But that number is still not above levels experienced in Cambodia prior to the economic crisis, when air arrivals jumped by 33.4 percent to 841,963 between 2006 and 2007.

And the price of air travel is generally much higher now than it was five months ago, when the oil price was below $75 per barrel, ra­ther than $82 or thereabouts per barrel now.

“I know that the crisis has al­ready passed, but…when we discuss with our Asian network, we see that the bookings is the same as the previous year and even in some cases less than last year,” said Pham The Hung, general manager at Vietnam Airlines in Phnom Penh.

He said flights between Cambo­dia and Vietnam, of which there are currently eight a day, were about 56 percent full, compared to 60 percent during the same time last year.

To bring back customers, Mr Hung said, Vietnam Airlines would likely introduce promotional offers as the high season for tourism—traditionally October to March—progresses.

Chay Chun, country manager of Silk Air, which is owned by Singa­pore Airlines, is also wary of small growth levels in the industry.

“The passenger levels are better than last year, but I think that we’re not as strong as pre-crisis,” he said.

Nevertheless, Silk Air is currently filling its aircraft to between 60 and 70 percent of capacity, compared to below 60 percent last year.

“Demand is coming back slowly. Of course for airlines to bring back the capacity levels that we had pre-crisis it will take a while,” he said.

Silk Air currently runs two return flights a day between Singapore and Phnom Penh.

Experts say the lack of growth is partly down to a lack of competition and high ticket prices.

“Now that we are gathering mo­mentum, the prices have been in­creasing dramatically,” said Mohan Gunti, an adviser at the Cambodian Association of Travel Agents. “Price fluctuation will effect the movement of passengers.”

Mr Gunti said there was room in the airline industry for low-cost carriers like Air Asia to bring more passengers to Cambodia.

“Airlines will play an important role in the tourism industry, but it is how and what kind of passenger they will bring” that counts, he said. “We need the numbers, whether they are coming from low cost airlines or international markets.”

The government is ne­gotiating the entry of Philippine Airlines to operate a direct flight between Ma­nila and Phnom Penh, and other airlines are upping their activities here. In March, China Eastern started a route be­tween Shanghai and Siem Reap city, operating two times a week. China Southern Air­lines added three flights a week be­tween Phnom Penh and Guang­zhou, and Air Asia added sev­en flights a week between Phnom Penh and Kuala Lumpur.

From Novem­ber, Bangkok Air­ways will add a fourth daily return flight between Phnom Penh and Bangkok, flying out of Phnom Penh at 6:40 am. The flight will al­low passengers to connect with Air­berlin flights to Germany in a new partnership between the carriers.

Though Cambodia remains a small market, Stefan Magiera, general manager for Airberlin in Cam­bodia, said he expected Cambodia follow a similar development pattern to Thailand.

“Cambodia as a country has so much to offer to tourists,” he said at a ceremony launching the partnership with Bangkok Airways. “We have 60,000 Germans arriving in Cambodia every year…. With attractive fares it should be possible to in­crease the numbers.”

“Today is about laying the foundations for what is going to be catering for a growing market in the fut­ure,” said Ekkaphon Nanta-o-sot, deputy manager of communications at Bangkok Airways.

 

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