Thursday, November 4, 2010

The Heavy Cost of Cambodia Angkor Air

It's a long way to Siem Reap, at least by boat, as these tourists found out after a six-hour trip up the Tonle Sap from Phnom Penh. As the crow flies the journey is just 234km - so why are CAA one-way tickets close to $100 each?

Although new national carrier Cambodia Angkor Air launched last July with heavily discounted tickets on the sole domestic route between Phnom Penh and Siem Reap, prices have since increased close to three times over. So how do CAA fares compare to other carriers in the region?

Below is a comparison of CAA ticket prices against the national carriers of other ASEAN countries (note that it was impossible to get a quote for Myanmar's national domestic carrier Myanma Airways, while Singapore and Brunei do not have internal flights on Singapore Airlines and Royal Brunei Airlines). Prices are for one-way tickets for foreigners travelling on December 1 on the busiest routes for each country (tickets for nationals travelling domestically may be cheaper):

Country Airline Route Price Price per km
1. Cambodia Cambodia Angkor Air Phnom Penh-Siem Reap $98 $0.4188 ($98/234km)
2. Laos Lao Airlines Vientiane-Luang Prabang $85 $0.3972 ($85/214km)
3. Indonesia Air Garuda Jakarta-Yogyakarta $73 $0.1611 ($73/453km)
4. Thailand Thai Airways Bangkok-Chiang Mai $83 $0.1426 ($83/582km)
5. Malaysia Malaysia Airlines Kuala Lumpur-Penang $46 $0.1420 ($46/324km)
6. Philippines Philippine Airlines Manila-Cebu $30 $0.0615 ($35/569km)
7. Vietnam Vietnam Airlines Hanoi-Ho Chi Minh City $51 $0.0442 ($51/1155km)
8. Myanmar Myanma Airways N/A
9. Brunei Royal Brunei Airlines N/A
10. Singapore Singapore Airlines N/A

* Currencies are converted on October 31 and November 1 using www.xe.com. All distances are calculated as the crow flies from and to the airports in question. All prices are for available flights booked on October 31 and November 1. All prices include relevant taxes, including embarkation airport tax.

What does this tell us? Firstly, CAA is the most expensive national carrier within ASEAN, while its joint-venture partner Vietnam Airlines is by far the cheapest. The prices below are calculated as the crow flies but in reality, the Hanoi-HCMC route requires the biggest deviation from the shortest route to avoid Laos and Cambodia. That makes it even better value per kilometre.

Of course, CAA is also the newest of these airlines and has initial fixed costs to cover, but then it enjoys zero competition after Bangkok Airways did not renew its licence to fly domestically in Cambodia at the end of last year. Vietnam Airlines, by comparison, is in competition with budget carrier Jetstar on the popular Hanoi-HCMC route.

Other factors are also significant. Cambodia has the highest government tax on domestic flights within ASEAN by far at more than double the second most expensive, the Philippines. Also, fuel is likely to be considerably more expensive in Cambodia given the Kingdom does not produce or refine any oil products.

Nevertheless, at a time when the government and airport controller Societe Concessionaire des Aeroports (SCA) are trying to encourage international tourists to stay longer and spend more money, surely such expensive flights will only encourage travellers to opt to use the bus instead (or even decide to limit travel to one domestic destination). SCA figures last week for this year up to October showed that domestic air traffic fell 12 percent from Phnom Penh and 9 percent from Siem Reap compared to 2009, which itself was the trough of a major economic slump.

Perhaps even more importantly, when will CAA take the lead and fly to Sihanoukville?

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