Cambodia's Aviation Industry Also Screams: "All 5 Airbus Planes Sold"

[Asia Economy Phnom Penh Correspondent An Gil-hyun] The aviation industry crisis caused by the spread of the novel coronavirus infection (COVID-19) has hit Cambodia. As passenger demand plummets in Cambodia, which heavily depends on the tourism industry, foreign companies investing in the regional aviation industry are crying out in distress.

According to Vietnamese media such as VN Express on the 21st, Vietnam Airlines recently announced that it will withdraw from managing Cambodia's state-owned airline, Angkor Air. Vietnam Airlines is the largest shareholder holding 49% of Angkor Air. Angkor Air started operations in July 2009 with participation from the Cambodian government and private investors, but after 11 years, the largest shareholder has decided to give up management.

According to reports, Vietnam Airlines has signed a sales contract for five Airbus 321 aircraft valued at $37 million in liquidation value. As a result, only propeller aircraft remain with Angkor Air, darkening the management outlook even further after the COVID-19 situation subsides.

This situation is closely related to the recent crisis in Cambodia's aviation industry. Last month, the total number of international flights at Cambodia's three international airports?Phnom Penh, Siem Reap, and Sihanoukville?was 2,575, a 40% decrease from 4,241 flights in December last year. International passengers also dropped 55%, from 362,414 to 170,387.

The outlook for this month's performance is expected to worsen further. The Cambodian Ministry of Foreign Affairs announced measures effective from the 1st of this month, including suspension of visa exemptions for ASEAN nationals, suspension of tourist visas, e-visas, and visas on arrival for all foreigners regardless of nationality, submission of negative COVID-19 test certificates, and submission of insurance certificates guaranteeing treatment costs exceeding $50,000 in case of infection during the stay?effectively refusing foreigners for a month.

According to a report released by the Vietnam State Capital Management Committee (CMSC), Vietnam Airlines, which owns 160 aircraft, is currently operating only six and half of its employees are on leave. It is evaluated as the most severely affected among the 19 state-owned enterprises managed by CMSC. The report stated that Vietnam Airlines' short-term debt amounts to $150.94 million, and funds required from this month amount to $514.58 million, requesting government intervention.

The worsening performance is not limited to Vietnam Airlines. The three international airports in Cambodia are operated by France's Vinci Airports until 2040, and six Cambodian national airlines?Basaka Air, Cambodia Airways, Cambodia Angkor Air, JC International Airlines, Lanmei Airlines, and Sky Angkor Airlines?were all established with foreign capital from countries such as China. All these operators are showing red flags in their performance.

Meanwhile, the International Air Transport Association (IATA), which has over 280 airlines worldwide as members, projected that global airline passenger revenue will decrease by $250 billion compared to last year due to the impact of COVID-19. The association initially estimated the damage at $113 billion earlier last month, but the damage forecast has more than doubled within a month, indicating the significant shock COVID-19 has dealt to the aviation industry.