AirAsia To Launch Cambodian AOC, Calls For Relaxation Of Local Policies

PHNOM PENH, Cambodia—AirAsia has signed a joint-venture agreement with Cambodian investor Sivilai Asia to create AirAsia Cambodia.

The LCC giant hopes to bring as many as 6 million passengers into Cambodia annually from across its Southeast Asian network, but only if the local airport and authorities reduce fees and taxes.

AirAsia will take a 51% stake in AirAsia Cambodia with Sivilai holding the remaining shares. Both partners are expected to directly invest $5 million into the operation initially, rising up to a maximum of $25 million under the terms of agreement. Pending regulatory approvals and securing an air operator’s certificate (AOC), the airline is slated to commence operations in late 2023. 

Vissoth Nam, Sivilai Asia’s director, has been designated as AirAsia Cambodia CEO. 

Tony Fernandes, CEO of AirAsia’s parent company Capital A, told Aviation Daily Dec. 9 that the airline is expected to have 10-12 aircraft, primarily Airbus A321s, which will be direct-leased from AirAsia. 

Cambodia saw 6 million visitors pre-pandemic in 2019 and is currently hovering at around the 2 million mark for 2022.

Fernandes said the carrier can stimulate 6 million more travelers within three years, opening up new markets in ASEAN, North Asia and India. Cambodia is an untapped market, Fernandes said, underserved due to a lack of connectivity and frequencies. He called on the government to remove its visa on arrival requirement, reduce fuel taxes and lower airport fees. Fernandes said Cambodian airport fees are around 40% more than the country’s counterparts in the Association of Southeast Asian Nations (ASEAN) bloc. 

“The government will realize that by lowering the fees, you will see greater long-term income with more arrivals into Cambodia.” Fernandes said. 

AirAsia’s majority stake in AirAsia Cambodia represents only the company’s second subsidiary that it controls. AirAsia is currently in the process of taking full control of AirAsia Philippines, which is in the final negotiation stages. Fernandes hopes the government of Thailand will approve a similar takeover of shares to eventually create a truly ASEAN airline. 

AirAsia carriers currently operate five routes to Cambodia: from Kuala Lumpur to Siem Reap and Phnom Penh; from Penang to Phnom Penh (starting Jan. 3, 2023); and from Bangkok’s Don Mueang International to Siem Reap and Phnom Penh.