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Last Updated: Monday, 6 February 2006, 23:56 GMT
Budget flights arrive in South-East Asia
By Guy De Launey
BBC News, Phnom Penh, Cambodia

Cut-price air travel has arrived in South-East Asia - and it is making the same kind of impact as it did in Europe and the United States.

Passengers on a low-cost air flight
Low-cost airlines have outperfomed higher-priced rivals in recent years

Well-established national carriers that have enjoyed near-monopolies are finally being challenged.

The newcomers use a similar business model to internet-based operations in Europe and the US.

Because of the limited access to computers in some countries in the region, tickets are also available through travel agents.

But the same principle applies: the earlier you book, the cheaper the ticket.

One of the main players is the Kuala Lumpur-based Air Asia, a company that has grown rapidly since it started four years ago.

It recently made a canny decision to buy advertising at English Premiership football matches - ensuring massive exposure to potential customers around the world.

New destinations

Air Asia's chief executive, Tony Fernandes, feels he has thrown down a challenge to the established carriers in the region - although an inability to obtain landing rights in Singapore clearly rankles.

"It is a country that is supposed to welcome open competition, but they are scared of us," he said.

Decommissioned President Airlines jet at Phnom Penh airport
Not all Cambodia's airlines have been commercially successful

"We will open up new destinations. People can go to Bali and Bangkok to shop. It is going to be a loss for Singapore."

Another of those new destinations is Cambodia. In October, Air Asia started flying from Phnom Penh and Siem Reap to Bangkok and Kuala Lumpur.

With no major carriers of its own, Cambodia operates an "open skies" policy - and the low-cost carrier has been given a warm welcome.

There were already two airlines offering direct flights to Bangkok. But the effect on the cost of flying to Malaysia, previously only possible with Malaysia Airlines, has been dramatic.

It is now possible to book a return from Phnom Penh for as little as $41, including taxes.

Even though it has been struggling financially, Malaysia Airlines was forced to respond with price cuts of its own.

Welcome change

Jet Star Asia, backed by the Australian carrier Qantas, has made a similar impact by starting flights between Singapore and Cambodia.

Singapore Airlines' regional carrier, SilkAir, used to charge $400 for a round trip from Phnom Penh.

Cambodian Tourism Minister Lay Prohas
More and more people will now be able to afford to come to Cambodia
Cambodian Tourism Minister Lay Prohas

The arrival of Jet Star Asia's service has prompted SilkAir to cut its prices in half.

It is a welcome change for people in Cambodia to have a choice over which airline to fly.

The country's own carriers have an unhappy recent history, and Phnom Penh is littered with the offices of companies that have ceased to operate.

Those still flying have to battle an image problem.

Local airlines have a reputation for cancelling flights at short notice, and there are also safety concerns.

PMT Air flies elderly Antonovs to domestic destinations, but its reputation was tarnished by an accident on landing in Ratanakkiri last month. Nobody was seriously hurt, but the United Nations subsequently barred its staff from flying with the airline.

Royal Khmer is trying to rebuild its business after more than a year out of action. It offers flights to several destinations in South East Asia as well as Cambodia's tourist centre, Siem Reap.

Abandoned planes

The outlying parts of Phnom Penh Airport are a testament to the fate of most Cambodian airlines.

Idle Antonovs and Chinese Y7 passenger planes in several different liveries line up next to about 20 abandoned MiG fighter jets in various stages of decay on the weed-strewn concrete strip.

A clearly decommissioned President Airlines jet sits behind a fence in the middle of a well-kept garden.

The arrival of Air Asia and Jet Star Asia suggests that the remaining local carriers will have to improve quickly if they are not to go the same way. Cambodia's Tourism Minister, Lay Prohas, takes a pragmatic view.

Abandoned MiG fighter plane at Phnom Penh airport
Phnom Penh airport has its fair share of decaying planes

"More and more people will now be able to afford to come to Cambodia," he said.

"To have Jet Star Asia and Air Asia is a wonderful thing for tourism. People will have more money to spend on other things, like accommodation, entertainment and souvenirs."

As tourism is the number two industry in Cambodia - and growing rapidly - the increased competition among South-East Asian airlines has come at exactly the right time.

Across the region, eyebrow-raising deals are on offer.

Air Asia's current promotion is for two million free tickets; or you could fly to Darwin in Northern Australia for one Singapore dollar with Tiger Airways, partly-owned by Singapore Airlines.

Passengers still have to pay the usual charges and taxes, but travel bargain-hunters will be hoping this golden era lasts rather longer than some of Cambodia's airlines.


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