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Move to make aviation industry more competitive

Sorn Sarath / Khmer Times Share:
Airplanes at the Phnom Penh International Airport. Moves are afoot to acquire them more cheaply. KT/Khem Sovannara

Cambodia is discussing the feasibility of joining the Cape Town Convention, an international treaty that would help the Kingdom’s aviation industry become more competitive, according to the State Secretariat of the Civil Aviation (SSCA).

The discussions were held at a joint conference between the SSCA, Boeing Co and the US embassy to Cambodia under the chairmanship of Mao Havannal, the minister in charge of the SSCA, and Patrick Murphy, the US ambassador to Cambodia, with the participation of representatives from relevant ministries, government agencies and Cambodia Angkor Air.

The Cape Town Convention on International Interests in Mobile Equipment – or Cape Town Treaty – is a mechanism allowing aviation companies to lease or buy aeroplanes and helicopters at a lower cost, as well as to acquire some of the latest aviation technologies on the market.

Havannal said that although this international convention is mostly used in the field of civil aviation, it can also be applied to other sectors, in accordance with different protocols of the convention, such as railways, air space, mining and agriculture and construction equipment.

“[It] will facilitate domestic airlines to be able to compete with other airlines in the international market through equity financing opportunities,” he said.

According to the discussion, joining the convention will provide Cambodia with economic benefits, by reducing borrowing and financing costs for airlines and airline operations, reduce the cost of renting or purchasing aircraft and equipment, increase financing options so ticket prices would be lower than before.

Havannal said so far 78 countries had ratified the convention as of July 2020, including  16 countries in the Asia-Pacific region: Afghanistan, Australia, Bangladesh, China, Fiji, India, Indonesia, Kazakstan, New Zealand, Malaysia, Mongolia, Myanmar, Pakistan, Singapore, Tajikistan and Vietnam.

SSCA’s spokesman Sin Chansereyvutha said joining the treaty will provide benefits for civil aviation and airline operators.

“Operators can purchase and lease airplanes at a special price with low risk. By not  joining the convention, local airlines need a third company, mostly in another country, to guarantee Cambodian airlines can lease aircraft,” he said, adding that currently all airline operators in the country go through brokers for purchasing and leasing at a high cost.

However, he said that Cambodia faces challenges in order to become a member of the convention.

“We need to follow very strict conditions. We have a lot of work to do and some of our laws need to be revised or changed to comply with the criteria,” he said.

According to Chansereyvutha, after Cambodia is ratified, the country will have a grace period of at least two years to implement or it will be deregistered if it cannot comply with essential conditions.

“We are willing to join the convention but we need around two to four years to be ready and we need to learn about the experiences of other countries such as Vietnam and Myanmar, that are already members of the convention,” he said.

The convention was jointly organised by the International Institute for the Unification of Private Law (UNIDROIT) and the International Civil Aviation Organization (ICAO)  and adopted in Cape Town, South Africa, on Nov 16, 2001. UNIDROIT’s objective is to harmonise international private law across countries through uniform rules, international conventions and the production of model laws, sets of principles, guides and guidelines. The ICAO  is a specialised agency of the United Nations. It changes the principles and techniques of international air navigation and fosters the planning and development of international air transport to ensure safe and orderly growth.

During the discussions, US Ambassador Murphy promised to further strengthen relations with Cambodia in the field of aviation by providing expert assistance and helping in the compilation of some necessary documents.

 

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