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TATE-OWNED Kampuchea Airlines (KA) has announced bold expansion and

modernization plans along with the takeover of the aviation side of its Thai

partner SK Air.

A KA spokesman said the airline plans to begin flying to

several new international destinations, including Hong Kong, Singapore, Kuala

Lumpur and southern China.

He said: "The first of these will probably be

Hong Kong in around six weeks [end of June]. We already have bilateral

agreements to fly to Hong Kong, Singapore, Kuala Lumpur and Taipei, so that is

not a problem."

The moves have been approved by the Council of Ministers

and are certain to fuel speculation that the Royal Government's deal with

Singapore International Airlines to create a new national flag carrier Royal Air

Cambodge (RAC) has hit trouble.

RAC was due to begin flying on July 1 but

a contract has still not be signed despite earlier expectations the deal would

be finalized months ago.

Under the proposed deal, KA was to have ceased

flying along with SK Air and another Thai-owned company Cambodian International

Airways, leaving RAC as the exclusive national flag carrier. KA's staff were to

have transferred to the new airline.

The KA spokesman said: "I am not

aware of what is happening to Royal Air Cambodge but we as an airline decided

not to just sit here and wait to die."

SK Air has handed over its lease

on a Thai Airways Boeing 737-200 to KA but is to remain as guarantor. In

addition KA is to open negotiations with Malaysia Air to lease a Boeing 737-400,

which can seat up to 150 passengers and one or two turboprop Fokker 50 aircraft

for use on its domestic routes, the spokesman said.

In addition new

ground handling equipment will be bought and KA will install a computerized

ticketing and reservation system.

The spokesman said: "It is vital that

we improve our image and clarify who we are. Some people say they are confused

by the two companies SK Air and Kampuchea Airlines. In this situation we must

move very quickly."

Up to $70,000 worth of computer hardware will be

bought from Datacom in Thailand and terminals will be installed at the company's

HQ on Norodom Boulevard, at its offices in Bangkok and Ho Chi Minh and in the

provinces where a land phone line exists.

Eventually the check-in desk at

Pochentong will go on line also making it easier for passengers to buy tickets

at the last minute at the airport.

The spokesman said: "It is also very

important that we retrain the staff to work on the new system, they have been

used to working under the communist system."

Khmer staff from KA will

take over the management of the entire operational side of the business, the

spokesman said, adding: "SK Air will be our partner as a sales and marketing

agency."

From May 27 even the announcements on the Boeing 737 will be

made only in Khmer and English, with those in Thai being dropped. Even SK Air's

logo has been dropped from tickets, which now only sport that of Kampuchea

Airlines.

Also on May 27 Kampuchea Airlines inaugurated one-day package

tours to Angkor from Bangkok.

Contrary to earlier reports there are no

direct flights. Instead the airline is selling a package consisiting of

connecting flights between Bangkok, Phnom Penh and Siem Reap, lunch at the Grand

Hotel, entrance to the temple complex and an English speaking guide.

Pichid Ittisin, SK's sales manager in Phnom Penh said: "I have heard

that the lease on the Boeing 737 has being changed to Kampuchea Airlines but I

can't comment on anything else."

SK President Kovit Thanyarattakul failed

to return calls to his Bangkok office to comment on the re-organization.