Air France to re-start Phnom Penh Flights after 35 Years

Air France has announced plans to re-launch flights between Paris Charles de Gaulle and Phnom Penh, Cambodia route last served direct in 1975. The Hub analyses the decision to re-enter Cambodia after 35 years.

Re-Launch

Air France has announced that it is to launch a thrice weekly service between Paris Charles de Gaulle and the capital of Cambodia, Phnom Penh. The flight will operate via Bangkok and starts from 27 March 2010. Air France will use an A340-300 on the route, equipped with 275 seats (30 in Business, 21 in Premium Voyageur and 224 in Voyageur-Economy), Air France has already stated that the route will be upgrade during summer 2011 to a Boeing 777-200 equipped with 309 seats (35 in Business, 24 in Premium Voyageur and 250 in Voyageur-Economy).

Air France & KLM Asia Network

Air France has a comprehensive network in Asia serving 14 destinations, five of the Air France routes are operated double daily, Hong Kong, Tokyo, Shanghai, Bangkok and Beijing. The Air France network compliments the Asia network offered by its partner KLM. Air France concentrates on the India and Vietnam markets, neither markets that KLM serve, with the exception of Delhi, whilst KLM serves Malaysia, Taiwan and the Philippines. China and Japan are served by both carriers. The Air France focus in Vietnam and Cambodia is obvious given the historic links between France and both countries.

Air France and KLM Weekly Frequency to Asia

source: Flightbase 25-31 October 2010

The Paris - Phnom Penh market

Cambodia was previously part of French Indochina (until 1953) and there are social and economic links between the two countries. The country has a population of only 14 million (2008 census) and a GDP per capita of only $2,084 (IMF 2010). It is expected that the new service will be able to stimulate the leisure market, with the growing numbers of tourists visiting the historical sites in Cambodia, such as Angkor Wat.

Air France has previously served Cambodia, but stopped operating in 1975 when the Khmer Rouge came to power. Air France will provide the only long haul schedule flight into Cambodia from outside the Asia region. So Air France will effectively be able to capture a large share of the outbound European market, both leisure and business. IATA BSP Data (12 months to July) illustrates that there is 19,610 O&D traffic between Paris and Phnom Penh, but the total European market is 41,423. So Paris currently accounts for nearly 50% of the European market to Phnom Penh according to IATA BSP Data. Of the existing O&D traffic between Paris and Phnom Penh the majority of the traffic is travelling through Bangkok, Hong Kong, Singapore and Seoul Incheon.

Given the significance of Angkor Wat and therefore the airport of Siem Reap, Air France will no doubt look to work with local carrier Cambodia Angkor Air which is a joint venture between the Cambodian government (51% share) and Vietnam Airlines (49%). Cambodia Angkor Air serves the Siem Reap from Phnom Penh five times daily with an ATR 72.

Operating Phnom Penh behind Bangkok reduces the risk of serving the market and reduces the numbers of passengers to make the service breakeven. Air France should also be able to get 5^th freedom rights on the Bangkok - Phnom Penh sector as Bangkok is an open skies market. With no other European direct services, the tag is unlikely to significantly impact Air France's ability to capture the majority of the European market. The question will be how long it will take to operate direct with the tag