Cambodia Tycoon To Launch New Airline With Philippine Flag Carrier

Cambodian tycoon Kith Meng, who runs banking-to-telecoms conglomerate Royal Group, is teaming up with Philippine Airlines (PAL) to launch a new carrier later this year. In a filing to the Philippine Stock Exchange, San Miguel, the part-owner of flag carrier PAL, along with billionaire Lucio Tan, confirmed the joint venture, in which PAL will hold 49%. The news was first reported Wednesday by the Philippine press. The new airline will be called Cambodia Airlines, not to be confused with state-owned Cambodia Angkor Air. A handful of private carriers also ply Cambodia’s skies, but the market is dominated by regional carriers, mostly flying in from neighbouring Bangkok. A Cambodian startup would need to offer new routes or attractive discounts to compete with carriers like AirAsia and Bangkok Airways. San Miguel gave no details of how PAL would be involved in the new airline’s launch. San Miguel acquired 49% of debt-ridden PAL last year; Tan holds the majority share. Under new ownership, PAL has finally begun to upgrade its fleet and turn around its poor image.

Australian-educated Kith Meng got his start supplying UN peacekeepers in Cambodia after 1991 and later obtained a wireless telecoms license before diversifying into property and media. His Royal Group also runs a joint venture bank with Australia‘s ANZ Bank. But his reputation, like that of Prime Minister Hun Sen, his erstwhile patron, is tarnished by allegations of thuggish behaviour, as described in this 2008 FORBES profile. His swaggering style sets him apart from more low-key businesspeople who have emerged since the 1990s rebuilding of war-shattered Cambodia. As the economy has grown, a new class of tycoons has emerged. In a leaked U.S. cable from 2007 that listed the players, Kith Meng was dubbed ‘Mr Rough Stuff’. How this translates into running an airline remains to be seen. But political connections should come in handy when it comes to securing land rights, as well as cross-promotions via his media assets.Cambodia Airlines is only the latest sign of bullishness in Southeast Asian air travel. Indonesia‘s largest carrier Lion Air surprised the market last month by ordering 234 Airbus aircraft, only a year after a deal with Boeing for a similar fleet expansion. AirAsia, run by Malaysian billionaire Tony Fernandes is also expanding rapidly in the region and is expected to guard its turf fiercely against Lion Air, which is privately held. By some estimates, over 1,000 new aircraft could be deployed in Southeast Asia over the next decade, testing the region’s spending power and putting airlines into a potential tailspin if economic growth slows.