Cambodia Airlines deal still a go

A Philippine Airlines Inc airplane sits on the tarmac at Terminal 2 of Ninoy Aquino International Airport in Manila in 2010. BLOOMBERG

Cambodia Airlines deal still a go

Phnom Penh Post | 13 February 2014

 

Philippine Airlines (PAL) is reportedly still pursuing plans to launch a Cambodian carrier with local firm Royal Group, despite the lengthy delays, fears of political unrest and aviation industry scepticism over the viability of another entrant into the small domestic market.

PAL denied it had shelved preparations for the Cambodia Airlines venture, according to a local media report yesterday, which cited a Philippines Stock Exchange disclosure statement. PAL’s statement said it is simply not true that the joint venture with Inter Logistics (Cambodia), a subsidiary of Royal Group, had been put off.

“We wish to clarify that on-going preparations for the completion of the contemplated joint venture agreement between Philippine Airlines, Inc and Inter Logistics (Cambodia) Co Ltd, relating to Cambodia Airlines Co Ltd are currently being conducted,” PAL’s statement, reported by Philippine news site ABS-CBN, said. The affirmation comes after months of confusion over the project, to which PAL has committed $10 million.

Cambodia Airlines, which aims to become the country’s second full-service carrier after Cambodia Angkor Air, was initially slated to launch in mid-2013 with a $1 million investment from PAL. But after missing closing dates in June and October, the venture has yet to be finalised.

Doubts re-emerged last month when PAL’s CEO, Ramon Ang, was quoted in reports as questioning the viability of the project. 

Ang said Cambodia’s current “situation” was what gave him pause, alluding to an ongoing political stand-off over elections in July and deadly garment industry protests in January.

Not long afterwards, the Australia-based Centre for Aviation issued a two-part analysis of Cambodia’s aviation industry, arguing that demand was not high enough to support another commercial carrier.

“For PAL, the group has a lot on its plate and does not need the distraction of an overseas venture,” the centre’s report, dated January 30, said, describing the investment as a risky proposition. “While there are opportunities for more new services, there is not necessarily a need for a new Cambodian carrier,” the centre added. 

David Pearson, group controller at Royal Group in charge of overseeing the PAL deal, quashed industry and media speculation yesterday, saying the latest reports confirm what he understood to be the case all along.

“The report iterates what I said previously, that the project’s preparations are and always have been continuing,” he said. “Our aim has always been to develop a Cambodian airline for Cambodians.”

Pearson said last month that the deal was very close to being finalised, however he did not confirm an official launch date.