Cambodian aviation's surge in airline start-ups as Chinese traffic drives rapid growth

Cambodia's aviation market continued to grow rapidly in 1H2014 despite political instability in neighbouring Thailand and weaker demand from its largest source market, Vietnam. But Cambodia has been able to take advantage of the turmoil in Thailand and the sudden unpopularity of Malaysia by successfully marketing itself as an alternative destination to Chinese tourists. With Cambodia's liberal airline policy, investors are using the opportunity to establish locally in order to serve the China market from the other end of the route.

Visitor numbers from China are up about 20% so far this year, making Cambodia an exception to the overall slowdown in China-Southeast Asia tourist traffic. The Cambodia-China market is expected to continue booming in 2H2014 as more flights are launched, including new charter flights operated by at least two Cambodian start-ups backed by Chinese investors.

The total Cambodian aviation market grew by about 10% in 1H2014 with both of the country's main airports, Phnom Penh and Siem Reap, recording similar growth. The growth rate represents a slowdown from 2012 and 2013 but is impressive given other Southeast Asian markets have seen bigger slowdowns so far this year, and in some cases contractions.