Cambodia Investment Review

Cambodia’s aviation industry begins to rebound as AirAsia launches Cambodian Joint-Venture

Cambodia’s aviation industry begins to rebound as AirAsia launches Cambodian Joint-Venture

Gareth Johnson

Capital A, formerly known as AirAsia Group, has announced its subsidiary AirAsia Aviation Group has entered into a 51/49 joint venture with hospitality group Sivilai Asia to launch AirAsia Cambodia.

While the deal is still subject to regulatory approvals, the Cambodian company should launch by the second half of 2023 according to Capital A Chief Executive Tony Fernandes. The initial fleet would consist of two aircraft, consisting of two A321-200Ns, with later plans to expand to as many as 15 aircraft.

Read more: What airlines operate in Cambodia

Connecting all international airports in Cambodia

According to CH-Aviation, a leading flight industry website the total investment in the venture would be $5 million, with Capital A contributing $2.55 million for a 51 percent stake, while Sivilai Asia would invest $2.45 million.

It further added that investment would be paid in three tranches, with the first $2.5 million upon execution of the Joint-Venture agreement, $1.5 million within 3 months, and the final balance ($1 million) within one month of operation.

As the option expands Capital A has stated they expect AirAsia Cambodia’s paid-up capital to increase to up to $25 million. No specific routes were announced by the company but the company did state that they would be focusing on connecting the three main international airports of Cambodia (Phnom Penh, Siem Reap, and Sihanoukville) with existing AirAsia points in ASEAN, India, and China, with all routes being within a 4-hour radius of Cambodia.

The JV marks the 4th Asian country that Air Asia has entered after Malaysia, Thailand, the Philippines, and Indonesia. Before Covid-19 the company had planned to expand into both Vietnam and Myanmar, with these plans now being temporarily shelved.

New routes announced to Cambodia

The news comes on the back of a resurgence in Cambodian aviation, which has recently seen several other international connections announced. One of these is the new Siem Reap to Hanoi service announced by domestic carrier Angkor Air. The inaugural flight landed in Hanoi on Thursday 22nd December with 68 passengers according to an announcement by Angkor Air.

There are now three weekly flights using the Airbus A320, slated for Tuesday, Thursday, and Saturday. The announcement marks the first direct flights between Cambodia and the capital of Vietnam since the titular end to the pandemic.

Read more: What are the airports in Cambodia

While way below the pre-COVID levels of 6 million visitors per year the Kingdom is expected to welcome almost 2 million visitors this year, despite China, a principal source of that 6 million still being largely closed to outbound tourism.

This is a situation that many expect to change with China now having reversed its strict zero-Covid policy. And while no official announcements have yet been made, many industry experts expect China to be open to outbound travel by at least Q2 of 2023, with both local and Chinese airlines already planning for the increased foot flow that would create.

Turning Phnom Penh into a regional hub

The increase in routes is part of the government policy of turning Phnom Penh into a regional flight hub, with most long-haul flights currently going via Bangkok, or other regional hubs.

Cambodia is currently building new international airports in both Phnom Penh and Siem Reap, both of which will increase capacity by a huge amount. The new Siem Reap International Airport is slated to open b the middle of 2023 and will be able to receive 7 million passengers within the first year, increasing to in staged to 20 million by 2030.

The new Techo Takhmao International Airport is expected to be completed by 2early 2025 and will replace the aging Phnom Penh International Airport. Once completed it will be the 9th biggest airport in the world and have a capacity for 27 million passengers per year, in contrast to less than 10 million at the current airport.

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