Mekong Airlines has confirmed it will begin internal and external flights in

July, while efforts to revive the Kingdom's insolvent national carrier seem to

have stalled.

Mekong Airlines will take delivery of its first two planes

soon, said head of marketing Ross Pollock, and plans to add three more by the

year end.

VIA Aviation Limited, a group of Australian aviation industry

veterans, owns 49 percent of the new airline, while Hun Kim Leng Investments,

which aviation observers said was connected to the Prime Minister's extended

family, will take the majority stake.

The airline's executive director

Ian Scheyer said he was "delighted" with the progress made over the last two

months. The company predicted the airline would fly up to 8,000 passengers in

its first month of operation, and around 29,000 by December this year. Mekong

Airlines aims to carry 1 million passengers annually by 2007.

Pollock

said planned future ag-reements with major airlines in hubs such as Hong Kong

and Singapore meant those figures were realistic.

"Historically,

accessibility of tourism markets has resulted in a major boost," he

said.

Mekong Airlines stated it hoped to take advantage of the absence of

the bankrupt national carrier, Royal Air Cambodge (RAC), by including landing

slots at Siem Reap, Battambang, Bangkok, Ho Chi Minh City, Kuala Lumpur,

Singapore, Hong Kong, and Guangzhou.

RAC ceased operating in October 2001

to seek "a new financial situation" after reportedly running up debts of $30

million. Minister for the Council of Ministers, Sok An, who was brought in as

RAC's acting head last year, reportedly went to China in February to negotiate

the future of the company.

Hainan Air, in which American financier George

Soros has a stake, was thought to be interested in a joint venture with the

government, but RAC's domestic and international debts scuppered the

deal.

"Hainan did not reach an agreement with the Royal Government

because of [RAC's] many debts," said Long Chheng, deputy chief of cabinet at the

State Secretariat for Civil Aviation. He said an Australian investor met Sok An

in May, but decided against investing.

"If the government withdraws

[RAC's] debt, maybe companies will agree to buy it," said Chheng.