Airlines flying to Cambodia look likely to face increased competition with renewed
interest in the bankrupt national carrier from a Chinese company, and the arrival
by April of another new entrant.
With both groups seeking state approval for their plans, the Minister for the Council
of Ministers, Sok An, flew to China for negotiations on the future of Royal Air Cambodge,
the national carrier.
China's Hainan Air, in which American financier George Soros has a stake, is said
to be close to securing a joint venture with the government to re-launch RAC, which
ceased operations October 2001 to seek "a new financial situation" after
running up losses of at least $30 million. Minister Sok An is in charge of the airline
and is keen to find a new partner.
Early reports suggested a deal had already been done. However under-secretary of
state for civil aviation, Tea Sutha, said "negotiations are progressing at the
moment, but the agreement is not yet finalised".
A potential problem is that there is at least one court case still outstanding against
RAC and its former joint venture partners: the company is being sued for several
million dollars by ATR, a division of Airbus, for unpaid leases on its former fleet.
That case is being heard at the Queen's Bench Commercial Division of the High Court
in the United Kingdom.
A reborn RAC could face competition from Australian group, VIA Aviation, which earlier
announced plans for its own international airline. Mekong Airlines plans to fly to
several of RAC's old destinations including Hong Kong, Kuala Lumpur, Bangkok and
A management source said that the State Secretariat for Civil Aviation would issue
a licence early March; Mekong Airlines hopes to begin flights April 1.
"We have our company registered at the Ministry of Commerce and have applied
for an Air Operator's Certificate through the SSCA. This has been approved and will
be issued ... next week," he said. "We have great confidence in the ministries
to honour their commitments which we have discussed in depth over the past 12 months."
With tourist numbers up 25 percent on 2000 and with 250,000 passengers flying into
Phnom Penh alone, the rush of new airlines has caused fears about air safety and
In its 2001 report, the Cambodia Development Resource Institute stated that although
the government's 'open skies' policy had resulted in higher passenger numbers, "based
on current increases in passengers Phnom Penh [airport] will reach its capacity in
the next five years".