R

OYAL Air Cambodge is set to increase both its passenger load and income in the next

year, though unprofitable domestic routes are likely to keep it in the red.

The airline, resuming operations last year after a 20-year hiatus, lost $7 million

in its first 12 months which was an expected result, as it would be in any country,

RAC chairman Vichit Ith said.

"From Jan to June 1996 we have already carried 235,496 passengers representing

72 percent of the total of 1995," Vichit said. "We expect to reach 500,000

passengers by year's end...

"We had a passenger revenue of $22.5m during 1995. We have already achieved

$18.3m for the first six months of 1996 and expect to reach $37.7m by year's end.

"On international routes, we have increased market share on each destination,

from a low of 19 percent on certain routes, for example Ho Chi Minh City, to a high

of 48.7 percent in 1996 for Hong Kong.

"Contrary to what critics think, RAC is actually losing money in its domestic

operations," he said.

Vichit hinted RAC was obliged to fly these unprofitable routes.

"Under normal circumstances - a country with a good image and strong economy

- no airline can make money during its first few years of operations.

"The only way for RAC to bpreak even the first year would be to have one Boeing

737 and one ATR-72 only with limited international and domestic destinations.

"That scenario was not acceptable as RAC has to fly from day one to all the

domestic destinations for social service purposes and helping link major provinces

to the capital.

"In this respect, RAC directly subsidizes the rural development policy of the

Royal Government by accepting to fly unprofitable routes...."

The RAC chief also took the opportunity at the launch of the airline's new advertising

campaign to hit out at a range of accusations, including RAC's preferential treatment

towards Malaysian employees and management and allegations in the Khmer press of

financial mismanagement and improprieties on his part.

"RAC has a management agreement with MAS [RAC is a 60-40 joint venture between

RAC and Malaysian Helicopter Services]. The objective is to transfer airline expertise

from an international carrier to start up RAC and to upgrade the knowledge and expertise

of Cambodian staff over the first few years....

"We are looking to hire more Cambodians but provided they meet the job description.

"We cannot afford to hire a Cambodian on the basis of his or her nationality

alone."

Later, Vichit touched on his $10,000 monthly paycheck - a favorite and constant of

the Khmer press.

"As for my salary and the issue of self interest, the critics should understand

that a salary is given for actual labor rendered in a transparent and visible manner.

It is also based on my own worth and experience as well as my executive position

as CEO.

"My salary at RAC is actually lower than the total salary package I was earning,

prior to returning to Cambodia, given my corporate international management experience

with multinationals...

"Lastly, my salary is $10,000, not $15,000, and I do not gain any commissions

whether in kind or cash of any nature."

The image advertisement campaign, which features seven print ads, are designed around

Cambodia's touristic attributes, said Ith, and are targeted for markets in Southeast

Asia, Hong Kong, South Korea, Japan and Taiwan.

"We target these countries because they fit into RAC's strategy on becoming

a strong regional airline," he said.

"It has been forecasted intra-Asia airline passenger traffic will continue to

have the highest growth in the world with a growth rate of nine percent per annum."

Next month, RAC will be celebrating the 40th anniversary of its founding, and will

inaugurate its newest international sector - Phnom Penh to Guangzhou, China return

- on November 2.