Philippine Airlines (PAL) has disclosed that it intends to pursue its plan to invest in Cambodia Airlines in a statement to the country’s stock exchange. PAL has stated that preparations are in progress for the completion of the contemplated joint venture agreement between the two carriers. The news comes after PAL President Ramon Ang stated that doubts have been raised of the viability of the project due to political instability in Cambodia.
The proposed deal would see PAL invest $10million in return for a 49% stake in a new company with the Royal Group of Cambodia that would establish its first international airline – Cambodia Airlines.
Analysts have raised concerns about the proposed new venture since domestic passenger traffic has been flat since 2007, says the Centre for Pacific Aviation, which also adds that the demand for a second Cambodian airline does not exist.
PAL’s new venture intends to use Dash 8 turboprops to launch domestic services competing with Cambodia Angkor Air on routes to Sihanoukville and Siem Reap. The new airline also intends to use two A321s for international operations.
The CAPA report suggests that PAL should rather focus on reducing its own expenditure and improving its own profitability than adding to its responsibilities.