Malaysian Helicopters Services (MHS) looks set to pull out of its joint venture with Royal Air Cambodge (RAC), following the new Cambodian Government's decision to establish a joint venture airline with Thailand and open international air services.

The Cambodian Government has signed a memorandum of understanding with Orient Thai Airlines (formerly Orient Express Airlines) to create Kampuchea Airlines. The new carrier says that it plans to fly from Phnom Penh to Bangkok and Singapore, which will effectively end RAC's two and half year monopoly as Cambodia's national carrier.

According to Malaysian officials, the move breaks MHS' joint-venture agreement with the Cambodian authorities. Under the deal signed in late 1994, RAC was given exclusive use of Cambodia's traffic rights. "If these rights are now granted to another airline, it's a violation," says a Malaysia Airlines (MAS) executive.

MHS is still requesting a meeting of RAC's shareholders to clarify the future position of the airline (Flight International, 23-29 July). MHS holds a 40% stake in the airline, while the Cambodian Government has the remainder. RAC is now managed by MAS seconded staff and leases two Boeing 737-400s from the Malaysian airline, alongside three of its own Aero International (Regional) ATR 72s.

In the wake of the recent factional fighting in Cambodia, the two 737s were withdrawn to Kuala Lumpur. The new Government, led by prime minister Hun Sen, has said that it is no longer prepared to support loss-making RAC and has announced an "open-skies" policy towards international air traffic.

Hun Sen has been a strong critic of RAC, which was closely associated with the now-ousted royalist Funcinpec party of Prince Norodom Ranariddh. The open-skies announcement led MHS owner and MAS chairman Tajudin Ramli to state "-there is no more need to invest in the airline".

If, as is now anticipated, MHS pulls out of the joint venture, RAC is expected to continue operations, but under a new competitive environment. The Government has appointed Pan Chan Tra as the new chairman and chief executive of RAC to replace Vichit Ith.

The Thai-based Orient Thai had originally run Cambodia International Airlines until it was ejected from the country by the start-up of RAC. The airline later re-established itself as Orient Thai and now plans to wet-lease Kampuchea one of its two Lockheed L-1011 TriStars.

Source: Flight International