C AMBODIAN International Airlines (CIA) is heading to the negotiating table to try to get compensation for its stranded and out-of-pocket passengers.

CIA was abruptly shut down - though its closure has been looming for more than a year - on Dec 24 to make way for Cambodia's new national carrier, Royal Air Cambodge.

The new airline - effectively a joint venture between Malaysia Airlines and the government-owned Kampuchea Airlines - is being launched with great fanfare.

But the manner of its introduction has left CIA, and thousands of its passengers who stand to lose money from their now worthless tickets, furious.

Thai-owned CIA was advised in a Dec 19 letter from the Cambodian Civil Aviation Authority to cease operations from Dec 24, to make way for Royal Air Cambodge's monopoly to begin on January 2.

CIA estimates it has about 30,000 outstanding bookings from passengers - 30 to 40 per cent of whom have paid for their tickets.

Those seeking refunds are being pushed back and forth between the government and CIA.

CIA, which blames the government's Civil Aviation Authority for not giving it a longer period of notice of closure, has so far refused to pay refunds.

It has been referring refund inquiries to the authority - whose Phnom Penh office has put up a sign directing people back to CIA - and, for passengers in Bangkok, to the Cambodian Embassy there.

The government, meanwhile, issued a statement saying it did not accept any liability from the closure of CIA.

CIA's deputy manager, Jimmy Gao, said the airline intended to negotiate with other airlines, and the government, over what could be done for passengers left out of pocket by the closure.

He would not say whether passengers could expect to get refunds or free flights on Royal Air Cambodge or other airlines, saying: "It all depends. We have to sit down and talk."

He made it plain the government would be asked to contribute to helping the passengers, saying: "It was really all too sudden for us. The government has to acknowledge there is a serious problem here."

The Civil Aviation Authority's public relations director, Len Kep, was adamant that CIA bore all responsibility for compensating passengers.

"They must take care of their passengers - that's what I would expect if I were a passenger - and then negotiate with the government if they want to."

Passengers, meanwhile, are left wondering where to turn to.

Swedish woman Marlene Meyner and American Jason Stewart found themselves stranded in Phnom Penh after buying return air tickets in Bangkok on Dec 17.

"We don't know what we're going to do," said Mr Stewart.

Two Australians, Steve and Karen, who did not want their surnames published, were furious that CIA had sold them tickets after it had been informed of its closure.

"This is fraud," Karen said. The couple said they purchased tickets to Bangkok from CIA's Phnom Penh office on Thursday Dec 22, two days before the airline was to close.

They said they later went to CIA and to the Civil Aviation Authority, and were told at both places they were among 27,000 passengers with useless bookings.

Travel agents with customers with CIA bookings have also been hit hard.

Some agents spoken to by the Post said they were paying to send their passengers on others airlines, and would then seek a refund from CIA. Others said it was up to passengers to pay for alternative travel and try to seek a refund later.

"This is an absolutely terrible time," said Transair Travel's Robert Scott. "There are so many people who have already left to go on holidays.

"They will find out they can't get back from Bangkok, Singapore, Hong Kong..."

Plans for Kampuchea Airlines to merge with a foreign airline have been underway for more than two years, and CIA has always known it would probably have to close when an agreement was reached.

On Dec 19 - a day after CIA received the official go-ahead to expand its services to begin a charter service between Taiwan and Cambodia - the notification for it to close was sent by the government.

CIA says it did not receive the notice till Dec 22 - two days before the closure deadline - but the government says it could have been earlier.

Len Kep, of the Civil Aviation Authority, said CIA had known for two years that its days were numbered and had been irresponsible to take so many advance bookings.