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NagaCorp’s Chinese gamble

Traffic passes the NagaWorld casino in Phnom Penh last month. NagaCorp has acquired three aircraft with the aim of increasing VIP junket patronage at NargaWorld
Traffic passes the NagaWorld casino in Phnom Penh last month. NagaCorp has acquired three aircraft with the aim of increasing VIP junket patronage at NargaWorld. Scott Howes

NagaCorp’s Chinese gamble

More details have emerged of casino operator NagaCorp’s concerted effort to target the Chinese gaming market, with the release of an investor conference call transcript dated August 7.

In the 19-page transcript, NagaCorp chief financial officer Philip Lee states that the firm is on the verge of launching its own airline in partnership with state-owned China International Travel Services (CITS) and under the lessor name Bassaka Air.

“Bassaka Air is a new startup airline which is in the process of obtaining its aircraft operation certificate issued by the Cambodian authorities,” Lee is quoted as telling analysts during the conference call.

“And what we do is that we lease our two Airbuses to Bassaka Airline, and Bassaka Airline has signed up a general sales agency with CITS.”

According to Lee, NagaCorp purchased two Airbus A320s and one Gulfstream 450 at a cost of $44 million. Through Bassaka Air, the aircraft will be used exclusively to fly in gamblers from mainland China and Macau, in an effort to increase VIP junket patronage at the NagaWorld casino.

While NagaCorp envisions the airline beginning flights as early as this month, the State Secretariat of Civil Aviation on Monday confirmed with the Post only that Bassaka Air would receive its Airline Operations Certification by the end of 2014.

The transcript also reveals NagaCorp has developed plans for a $15 million VIP section at Phnom Penh International Airport.

Norinda Khek, spokesman for Cambodia Airports, declined to comment on NagaCorp’s VIP airport project, saying that no official plans for the project had been submitted.

Michael Ting, vice president of research for Hong Kong and China gambling at CIMB Securities, said NagaCorp’s concerted effort to fly in VIP Chinese gamblers aboard its own airline was a gamble.

“It’s a chicken-and-egg thing in terms of commercial flight availability versus VIP attraction to Phnom Penh,” Ting said.

“Right now, I would say that the commercial aircraft is probably not needed, but assuming demand ramps up, the commercial flights would be beneficial to overall VIP visits from China.”

NagaCorp’s interim financial statement shows the company made $86 million from VIP gambling operations between January and June, while mass market gambling revenue reached just $54 million.

The casino operator’s bid to attract more Chinese high rollers does not stop at direct flights or fancy airport lounges.

According to Lee, the company has also signed up one of CITS’s subsidiaries, China Duty Free Group (CDFG), to have exclusive retail space along the soon-to-be completed Naga City Walk on Sihanouk Boulevard.

“[CDFG] operate in all the Chinese international airports, and we have signed up China Duty Free as the tenant, as the sole tenant, for our City Walk, the retail development in front of Naga, which will be complete by end of this year and open in the first half of next year,” Lee said.

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