Delays continue to constrain launch of Cambodia Airlines

Delays continue to constrain launch of Cambodia Airlines

For Cambodians aspiring to a career in aviation, this weekend looks promising. Almost seven months after its formal establishment, Cambodia Airlines is hosting a career fair in Phnom Penh.

The airline is moving forward by looking for staff – from captains, first officers and cabin crew to reservations agents, marketing officers and cashiers.

But the future employer isn’t saying publicly when the airline will be ready for takeoff.

A joint venture to get the airline off the ground has been delayed on two separate occasions, along with the time period for the maiden flights. New deadlines haven’t been made public.

The time line has been thwarted by the long approval process for launching an airline, and, to some extent, the general slowdown in business activity after the national elections.

When will the first flights – originally targeted for the third quarter of this year – begin?

It’s “the $64 million question”, David Pearson, group controller of the Royal Group, the airline’s majority stakeholder, said in an interview. “We are . . . working for fourth quarter of this year.”

The Royal Group set up a firm called Cambodia Airlines more than 10 years ago but was still looking for a suitable partner. Negotiations began in 2012 with Philippines-based food, beverage and packaging giant San Miguel Corporation, which had already bought a 49 per cent stake in the loss-making Philippine Airlines for $500 million.

According to a statement on the Philippine Stock Exchange in May, Philippine Airlines would invest $10 million for a 49 per cent stake in Cambodia Airlines, with the first $1 million due on the closing date, July 15. The other 51 per cent would be owned by Inter Logistics (Cambodia), which is controlled by Royal Group of Companies chairman Kith Meng, the statement said.

But a statement to the same stock exchange in August said that the closing date for the completion of the joint venture had been moved to October 15.

“We’ve missed the 15th of October deadline,” Pearson said on Wednesday. “We are close to finalising but still have things to do,” he said, adding that no new date had been set.

Vann Chanty, director of air transport with Cambodia’s State Secretariat of Civil Aviation (SSCA), said earlier this week that Cambodia Airlines was still waiting for the authority’s approval and its Air Operator Certificate. “As I know, now they’ve come to stage four and it’s supposed to be finished by stage five,” he said.

Pearson said he cannot identify specific factors that have caused the delay.

“I mean, the process of establishing an airline is actually quite a long and complicated process, especially if you want to make sure that you abide by all the regulations,” he said.

Among the steps, according to Thomas Jaeger, managing director of industry website ch-aviation, are employing enough qualified individuals to meet certain criteria, and enough money in the bank to finance a start-up that can go months without revenue. After getting the Air Operator Certificate, an airline also needs traffic rights to operate in foreign countries, among other further requirements.

Cambodia lacks its own facilities and know-how, which slows down the approval process. To complement local resources, “often we depend on the availability of people outside Cambodia”, Pearson said.

Part of the approval process involves SSCA officials visiting training facilities for the various aircraft the airline wants to use – in Cambodia Airline’s case, two Dash-8 Q400s and two or three A320s for domestic and international flights.

The Dash 8 flight simulators that pilots train on are in Australia and not always available upon request. For the A320 training facilities, Cambodian aviation officials went to the Philippines, as the airline’s joint venture partner has a simulator. The future cabin crew will also be trained in the Philippines, Pearson said.

Politics played a role in the delay too, according to an October 21 statement on the Philippine Stock Exchange, in which Cecilia L Pesayco, assistant corporate secretary of Philippine Airlines parent company, PAL Holdings Inc, confirmed what Philippine Airlines president Ramon S Ang told local media. Ang was reported as saying that delays of the joint venture were caused by recent elections in Cambodia.

When Cambodia Airlines does launch, it will likely reshape the aviation sector. The newcomer will compete against national flag carrier Cambodia Angkor Air (CAA), which has until now dominated scheduled domestic flights.

Vietnam Airlines owns a 49 per cent stake in the airline, which was founded in 2009, while the Cambodian government owns the rest.

In January, a report by the Australia-based Centre for Aviation found that anti-competitive behaviour in Cambodia’s domestic airline industry is limiting its growth, with the relevant authorities reluctant to open the domestic market up to competition.

Apart from Cambodia Angkor Air, there are only a handful of chartered airlines operating in the country. The government disputed the accuracy of the report.

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