Debt-ridden Royal Air Cambodge has finally transferred its lucrative ground services at Pochentong Airport to the newly formed Airport Dedicated Services, a joint division of RAC and Societe Concessionnaire de l’Aeroport.
Philippe Rose, commercial and development manager for the airport development company, said recently that passenger transportation and baggage handling services at the Phnom Penh airport have been managed by the joint division since earlier this month.
The transfer was completed eight months after the two companies signed an amendment to the 10-year airport development agreement between the government and SCA signed in 1995.
Officials from both companies refused to disclose financial details of the agreement, but Rose implied then that the airline gave up its monopoly on ground services partially in exchange for forgiveness of an undisclosed amount of debt to SCA. RAC had been collecting about $2 million in revenue a year from the ground-services operation, according to airline officials.
But officials today emphasize the handover is aimed at upgrading airport services to world standards.
“No, no, no. It’s not a trade off to solve the financial issues,” Pan Chantra, RAC chairman, said Monday. “It’s a joint venture deal between RAC and SCA in order to improve the airport.”
According to the agreement, SCA will invest in the necessary equipment and human resources training to upgrade ground services, and the revenue generated through the services will be split between SCA and RAC—with SCA getting 60 percent of the profits and RAC the remaining 40 percent.
SCA is initially investing $2 million to purchase new equipment and train staff, Rose said. A sub-contractor called Cambodia Airport Management Services will carry out actual operations.
Pan Chantra acknowledged Monday that RAC still has more than $20 million in debt, mainly in aircraft leasing. It also owes the government about $5 million to $6 million including taxes and navigation fees, the chairman said. But he added the government also owes the airline about $3.5 million to $4 million for flight services including chartering its aircraft.