CAMBODIA'S RECENTLY concluded joint-venture agreement with Malaysian Helicopter Services (MHS) to relaunch Royal Air Cambodge (RAC), has been attacked as unconstitutional by the country's former finance minister Sam Rainsy.

He claims that the deal, giving MHS a 40% stake and virtual operational control of RAC, breaks "at least four articles of the constitution", including transferring national assets without parliamentary approval.

Rainsy was widely regarded as Cambodia's principal architect of economic reform, until he was dismissed by the country's coalition Government in October 1992 for his outspoken views, particularly on corruption.

The national carrier was relaunched in early January, equipped with a Boeing 737-400 leased from MHS-controlled Malaysian Airlines (Flight International, 11-17 January).

As part of the agreement, MHS loaned the Cambodian Government $6 million to underwrite its 60% stake in the airline.

RAC in return was given a monopoly on international and domestic services, forcing Bangkok-based Cambodia International Airlines (CIA), Kampuchea Airlines and its Thai joint venture SK Air to shut down their operations.

CIA claims that the Phnom Penh Government has defaulted on a 30-year contract allowing it to operate in the country. CIA says that it has plans to start imminent legal proceedings against the Cambodian Government in the courts of either Thailand or Singapore.

The airline, in the meantime, is working with the Cambodian National Syndicate of Tourism to provide "interim compensation" to the estimated 3,500 passengers stranded by its shutdown.

CIA is also looking at new routes, on which to operate its two-grounded Boeing 737-200s and Boeing 727-200s.

Kampuchea Airlines and SK Air have now ceased to exist. The former domestic carrier's two ATR 72s have been absorbed by RAC, while the single leased 737-200 operated by SK Air has been returned recently to Thai Airways International.

Source: Flight International