Logo of Phnom Penh Post newspaper Phnom Penh Post - Plan for new national air carrier put on hold: official

Plan for new national air carrier put on hold: official

Plan for new national air carrier put on hold: official

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14-story-1.jpg

Negotiations continue with Indonesian partner Rajawali Group; govt wants to proceed slowly to ensure success

Heng chivon

Phnom Penh International Airport.

$50m

The initial funding

earmarked for the new airline

The government would hold a 51 percent stake in the new national airline, which is yet to be named. No launch date has been announced by planners.

PLANS for a new Cambodian national airline, announced in May, have been put on hold as a result of difficulties with ongoing negotiations with an Indonesian investment group, government officials say.

Deputy Prime Minister Sok An was tapped to spearhead the deal in partnership with the Rajawali Group, but discussions with the Indonesian investors have not yet been finalised, he told the Post last week.

"We don't want our new national airline to fail like its predecessor Royal Air Cambodge," he said.  "We need more time to discuss the project with our partners."

Prime Minister Hun Sen last year announced plans to re-establish a national flag carrier to compete with other private carriers and attract more foreign tourists to Cambodia.

"Our new national airline will be very competitive with other companies as tourism in Cambodia continues to grow," Sok An said during a signing ceremony with Rajawali in Phnom Penh in April.

"The new carrier is expected to be profitable because of the rising number of travellers coming to the Kingdom," he added.

The Ministry of Tourism projects that Cambodia will receive nearly three million tourists from overseas by 2010.

National need

Ho Vandy, president of the Cambodia Association of Travel Agents, said the government should not delay the project too long if it wants to avoid greater competition from the private sector.

"I want to see the government move on the new airline as quickly as possible," he said, adding that the absence of a national carrier could give potential visitors the wrong idea about development in Cambodia.

The new airline will be funded by an initial investment of US$50 million, and the government of Cambodia will hold a 51 percent stake, with the balance held by Rajawali.

Cambodia's previous national carrier, Royal Air Cambodge, was established in 1994 through a joint venture with Malaysian company Naluri.

The government held a 60 percent stake before the airline went bankrupt in October 2001 after losses that year of $30 million.

Is it the right time?

The Cambodian government had initially sought a Chinese partner to establish the new airline, but talks collapsed.

Soaring aviation fuel prices, a softer international tourism market and stiff competition have also complicated efforts to establsh the new national carrier.

The International Air Transport Association earlier this year reported that the airline industry is facing one of its worse crisis in history.

The IATA represents airlines around the world.

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