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Known as AirAsia Cambodia, the new airline allows AAAGL to operate in existing markets where it already has a presence and operations to build scale, and network connectivity to further reduce operating costs.
“AirAsia Cambodia aims to further stimulate the Cambodian aviation and tourism industries, launch new destinations, create jobs and bring a truly low-cost operation to the country,” the company said in a statement released at the joint venture (JV) signing ceremony here today.
Capital A CEO Tony Fernandes and Sivilai Asia director Vissoth Nam signed the JV agreement with operations expected to commence in late 2023.
The new venture comes as Fernandes seeks to restructure the group following setbacks in Japan and India, and to exit from its Practice Note 17 (PN17) status, for Bursa Malaysia-listed companies that are in financial distress.
AirAsia Japan Co filed for bankruptcy with a Tokyo district court in 2020, while the company recently sold its stake in an Indian joint venture to partner Tata Group.
Capital A currently operates budget airlines in Malaysia, Indonesia, Thailand and the Philippines.
Fernandes said 2022 is about restarting the airline and returning to pre-Covid levels. This is already in place and will be completed by the second quarter of 2023, he said.
“The second half of 2023 will be when we focus on our continued efforts on growth. We are confident of profitability in the first year,” he said, adding Asean is an area the company knows well and can derive quick profitability.
The airline will connect its network to the main points of Cambodia, namely Phnom Penh, Siem Reap and Sihanoukville.
In a subsequent interview with Bloomberg Television, Fernandes said the venture will start with two aircraft and eventually expand to 15. “It’s time for expansion and time for growth,” Fernandes said.
“Cambodia is a very attractive market, population is up to 13 million, huge tourism potential, not a lot of airline capacity here, the largest airline only has four planes.”
The new airline should be profitable “from the get-go,” Fernandes boldly said.
Meanwhile, Vissoth said the company is proud to be the catalyst for a new low-cost airline operating from Cambodia.
“This will open the doors for students travelling abroad, supporting work-related travel, boosting trade ties, and providing a welcome boost for the growth of new small and medium enterprises.
Meanwhile, AAAGL group CEO Bo Lingam said setting up a majority-controlled JV in Cambodia is a natural step as AAAGL is the largest foreign airline and second largest airline group overall operating in Cambodia in terms of capacity.
Setting up a JV in Cambodia is in line with their Asean expansion strategy.
“We plan to operate mostly to our existing stations within a four-hour radius of Cambodia.
“AirAsia Cambodia will increase Cambodia’s network offerings by launching new services to Asean, North Asia and beyond in the future,” he said.
AAAGL operates five routes to Cambodia – Kuala Lumpur (KL)-Siem Reap; KL-Phnom Penh; Penang-Phnom Penh (starting Jan 3, 2023), Bangkok (Don Mueang)-Siem Reap, and Bangkok-Phnom Penh.
Since entering the Cambodian market in 2005, AirAsia has carried over 10 million guests to and from Cambodia.
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