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Cambodia Part 1: China, Thailand drive double digit passenger growth for sixth consecutive year

Cambodia continues to experience rapid traffic growth driven by surging demand from China. Passenger traffic in Cambodia has grown at a rate exceeding 10% for six consecutive years, including 13% in 2015.

China has been the biggest driver of growth, with Chinese visitor numbers increasing by at least 20% for six consecutive years. Capacity on the traditional route to Bangkok, the main gateway for long haul passengers heading to or from Cambodia, has also grown over the last year.

However, the rate of passenger growth in Cambodia slowed significantly in 2015, particularly at Siem Reap. Cambodia is still one of the hottest markets in Southeast Asia but neighbouring Vietnam is now expanding faster. Growth is expected to slow further in 2016, and will likely fail to reach double digits for the first time since 2009.

This is the first in a series of reports on Cambodia. This instalment will examine the overall growth in Cambodia’s international market, while the next report will focus on the colourful Cambodian airline sector.

Cambodia Airports reports 13% growth in passenger traffic for 2015

Cambodia Airports handled 6.47 million passengers in 2015, representing a 13% increase compared with 2014. Cambodia has now undergone double-digit growth for six consecutive years, making it consistently one of the fastest growing markets in Asia.

Cambodia Airports annual passenger traffic: 2006 to 2015

Cambodia Airports manages all three of Cambodia’s commercial airports. Siem Reap, a popular tourist destination famous for its temples, overtook the capital Phnom Penh as Cambodia’s largest airport in 2012. The third airport at the coastal resort town of Sihanoukville is tiny, with fewer than 100,000 passengers handled in 2015.

Siem Reap recorded 9% year over year growth in 2015 to 3.297 million passengers while Phnom Penh recorded 16% growth to 3.079 million. This marks the first time since 2009 that Phnom Penh had faster growth than Siem Reap. In 2009 both airports saw their traffic decline – with a larger dip for Siem Reap – as the global financial crisis impacted inbound visitor numbers.

Phnom Penh and Siem Reap annual passenger traffic and year over year growth: 2008 to 2015

International growth at Siem Reap slows while Phnom Penh accelerates

Cambodia is predominantly an international market. Phnom Penh’s international passenger traffic increased by 13% in 2015 to 2.682 million, while Siem Reap’s international passenger traffic increased by 5% to 2.858 million.

The international growth rate at Phnom Penh accelerated from 9% in 2014. In 2015 the international market accounted for 87.1% of total traffic at Phnom Penh, which also handled 354,000 domestic and 43,000 transit passengers.

Phnom Penh annual international passenger traffic and year over year growth: 2008 to 2015

The international growth rate at Siem Reap was by far the slowest since 2009. The international market accounted for 86.7% of total traffic at Siem Reap, which also handled 425,000 domestic and 14,000 transit passengers in 2015.

Siem Reap annual international passenger traffic and year over year growth: 2008 to 2015

Overall, domestic traffic accounted for 13% of Cambodia Airport’s throughput in 2015, or 846,000 passengers. Cambodia’s domestic market has grown much faster than the international market, although on a much lower base, including approximately 50% growth in both 2014 and 2015. The domestic market, which consists mainly of foreigners flying around Cambodia, will be analysed in more detail in a subsequent report in this series.

Cambodia relies heavily on inbound tourism

Siem Reap relies almost entirely on inbound leisure traffic. It is a highly seasonal market, with peak months recording up to twice as many passengers as off-peak months.

Phnom Penh is a more balanced market with a mix of inbound leisure, inbound business and outbound traffic. There is roughly 20% more traffic in the peak season than in the off-peak months.

Phnom Penh and Siem Reap monthly passenger traffic: Jan-2008 to Dec-2015

Phnom Penh Airport handled 962,000 visitor arrivals through the first 11 months of 2015 while Siem Reap handled 1,259 million visitor arrivals. Phnom Penh had 1.208 million international passengers during this period while Siem Reap had 1.276 million international passengers. As a result the inbound market accounted for almost 99% of total international traffic at Siem Reap and approximately 80% of total international traffic at Phnom Penh.

This includes business visitors and tourists, but approximately 95% of all visitors to Cambodia are on holiday. Tourist traffic is less seasonal at Phnom Penh as it is a more popular year-round destination, with its casinos being a particularly big year-round draw.

Inbound demand from China soars

China has been the biggest driver of growth at both of Cambodia’s main airports. Visitor numbers from China have increased fivefold since 2009, when Cambodia recorded only 128,000 Chinese visitors.

Visitor numbers from China increased 21% to 560,000 in 2014, marking the fifth consecutive year of growth exceeding 20%.

See related report: Cambodia aviation Part 1: China visitor surge makes Cambodia the fastest growth market in SE Asia

Cambodia’s Ministry of Tourism has not yet reported full year data for 2015. However, visitor numbers from China for the first 11 months of 2015 were up 24% to 508,000. Annual growth almost certainly exceeded 20% for the sixth consecutive year.

China visitor numbers to Cambodia and year over year growth: 2006 to 11M2015

Total visitor numbers to Cambodia increased by 5% through the first 11 months of 2015, to 4 million. Excluding China, visitor numbers were up by only 2%. In 2014 total visitor numbers were up 7%, but excluding China visitor numbers were up by a more modest 5%.

Vietnam, Thailand, Laos and South Korea are also big source markets

China is the second largest source market for Cambodia’s fast-growing tourism sector, after Vietnam. Chinese residents accounted for 15% of all visitors to Cambodia in the first 11 months of 2015, while Vietnamese residents accounted for 21%. However, a large portion of Vietnamese residents travel to Cambodia by road as the two countries share a land border.

Two other neighbouring countries, Laos and Thailand, are also large source markets for Cambodia, accounting for 8% and 7% of all visitors. Again, a large portion of Lao and Thai residents travel to Cambodia by road. Overall, 44% of visitors entered Cambodia by land in the first 11 months of 2015.

The other source market in the top five is South Korea, which accounted for slightly over 8% of all visitors in the first 11 months of 2015. However Korea has been a declining market, with visitor numbers down by 2% in 2014 and by 7% through the first 11 months of 2015.

South Korea currently accounts for 10% of international seat capacity in Cambodia, compared with 17% for China. Three years ago Korea had significantly more capacity than China.

Cambodia international seat capacity by country: 10-Feb-2016 to 16-Feb-2016

Scheduled seat capacity in the Cambodia-China market has nearly tripled over the last three years. Meanwhile, capacity in the Cambodia-South Korea market is currently at roughly the same level as three years ago, and down compared with two years ago.

Thailand becomes Cambodia’s largest international market

Thailand is now the largest international market from Cambodia in terms of scheduled seat capacity, having recently overtaken Vietnam. Cambodia-Thailand capacity is currently up more than 20% year over year, while Cambodia-Vietnam capacity has decreased slightly.

Cambodia is connected with four Vietnamese destinations but only one in Thailand. Bangkok is by far the largest international destination from Cambodia, accounting for almost 25% of total international seat capacity (this includes both Bangkok airports).

Bangkok is a large local market from Cambodia but most passengers flying from Phnom Penh or Siem Reap to Bangkok are travelling beyond Thailand. Bangkok Airways and Thai Airways particularly rely heavily on connecting traffic.

Bangkok Airways is the second largest foreign airline in Cambodia after Vietnam Airlines, currently operating six daily flights to Phnom Penh and five daily flights to Siem Reap. The sixth Phnom Penh frequency was added in early 2016. Cambodia is Bangkok Airways’ largest international market, with most passengers connecting at Bangkok to its foreign partners, including all three Gulf airlines.

See related report: Bangkok Airways Part 2: Plans for further network, fleet & partnership portfolio expansion for 2016

Qatar Airways is the only airline from the Middle East – or anywhere outside East Asia – serving Cambodia. But its Doha-Phnom Penh service is operated via Ho Chi Minh, and a large portion of Qatar’s Cambodia passengers travel via Bangkok on Bangkok Airways.

Thai Airways Group adds Siem Reap

The Thai Airways Group currently offers 17 weekly A320 flights to Phnom Penh and on 1-Feb-2016 launched 10 weekly A320 flights to Siem Reap. For now, the Phnom Penh flights are operated by Thai Airways and the Siem Reap flights are operated by regional subsidiary Thai Smile. But Thai Smile is also expected to take over the Phnom Penh flights by the end of 2016 as Thai Smile takes over the group’s entire A320 fleet.

Thai AirAsia is also one of the largest players in Cambodia’s international market, with three daily flights to Siem Reap and two daily flights to Phnom Penh. In addition, sister Malaysian airline AirAsia has two daily flights to Phnom Penh and 11 weekly flights to Siem Reap. While the AirAsia Group has a higher portion of point to point passengers than Bangkok Airways or Thai Airways, a significant number of its Cambodian passengers transfer beyond Bangkok and Kuala Lumpur.

The AirAsia Group, Bangkok Airways and Vietnam Airlines all have approximately 12% share of Cambodia’s international market. The Thai Airways Group has an 8% share, followed by Singapore Airlines regional subsidiary SilkAir with a slightly more than 5% share. SilkAir and Jetstar Asia (which has almost a 3% share) both serve Phnom Penh and Siem Reap from Singapore with significant transit traffic beyond Singapore.

Eight Chinese airlines now serve Cambodia

China Eastern and China Southern have become the sixth and seventh largest foreign airline groups in the Cambodian market, just behind SIA/SilkAir. Both have expanded over the last year and currently account for approximately 5% of total international seat capacity in Cambodia.

Top 10 foreign airlines from Cambodia based on weekly seat capacity: 10-Feb-2016 to 16-Feb-2016

Rank Airline Seats Capacity Share
1 Vietnam Airlines 22,316 12.4%
2 Bangkok Airways 21,420 11.9%
3 Thai AirAsia 12,600 7.0%
4 Thai Airways/Thai Smile 8,580 4.8%
5 SilkAir 9,648 5.4%
6 AirAsia 9,000 5.0%
7 China Southern Airlines 8,890 5.0%
8 China Eastern Airlines 8,382 4.7%
9 Dragonair 6,858 3.8%
10 Malaysia Airlines 6,194 3.5%

Six other Chinese airlines also now serve Cambodia – Air China, Lucky Air, Shandong Airlines, Spring Airlines, Tianjin Airlines and Xiamen Airlines – although the Lucky and Tianjin services are only seasonal. China accounts for more than 25% of the approximately 30 foreign airlines currently serving China. There are also four airlines from both Taiwan and South Korea serving Cambodia; China Airlines, EVA Air, TransAsia Airways and V Air from Taiwan along with Air Busan, Asiana, EastarJet and Korean Air from South Korea.

Total seat capacity to China is up over 20% year over year, while capacity to South Korea and Taiwan has been relatively flat. The 20% increase excludes charters, which account for a large and growing portion of passengers in the Cambodia-China market.

The Cambodia-Hong Kong market has also experienced a roughly 20% increase in seat capacity, driven by the launch of services by HK Express. The LCC began serving Siem Reap in Oct-2015, with three weekly flights and a fourth frequency during peak periods. Full service sister airline Hong Kong Airlines recently announced plans to launch three weekly flights to Phnom Penh from 27-Feb-2016, which will generate a further increase in Cambodia-Hong Kong capacity.

Dragonair had been the only airline with nonstop flights from Hong Kong to Cambodia and currently operates one daily flight to both Phnom Penh and Siem Reap. Hong Kong-Cambodia is a relatively small local market, with only 12,000 Hong Kong residents visiting Cambodia in the first 11 months of 2015. Hong Kong based airlines therefore rely heavily on transit traffic – generally other parts of North Asia, in particular mainland China.

Vietnam Airlines reduces Cambodia operation but still has leading role

Vietnam Airlines has reduced capacity slightly to Cambodia over the last year while the total market has increased in size. A year ago, in early Feb-2015, Vietnam Airlines had almost a 15% share of international seat capacity in Cambodia.

Vietnam Airlines currently operates services to Cambodia from Da Nang, Hanoi and Ho Chi Minh. It also operates fifth freedom routes from Phnom Penh to Vientiane, and from Siem Reap to Luang Prabang. A large portion of Vietnam Airlines' Cambodia passengers travel beyond Ho Chi Minh and Hanoi, particularly to North Asian destinations.

Of the top 10 international routes from Cambodia, only Siem Ream to Hanoi and Ho Chi Minh have experienced a decrease in capacity over the last year. There have been large increases on both Bangkok routes and Singapore-Phnom Penh and, not surprisingly, the largest gain has been on the Siem Reap-Shanghai route.

Top 10 international routes from Cambodia based on weekly seat capacity: 10-Feb-2016 to 16-Feb-2016

Rank Origin Destination Seats YoY change
1 Phnom Penh International Bangkok Suvarnabhumi International 17,756 26.2%
2 Siem Reap Airport Bangkok Suvarnabhumi International 13,168 17.2%
3 Siem Reap Airport Ho Chi Minh City Tan Son Nhat Airport 12,186 -12.1%
4 Siem Reap Airport Seoul Incheon International Airport 10,562 8.9%
5 Siem Reap Airport Hanoi Noi Bai Airport 10,248 -25.1%
6 Phnom Penh International Singapore Changi Airport 9,732 42.2%
7 Phnom Penh International Kuala Lumpur International Airport 9,604 0%
8 Phnom Penh International Ho Chi Minh City Tan Son Nhat Airport 9,064 1.3%
9 Siem Reap Airport Bangkok Don Mueang International Airport 7,560 0%
10 Siem Reap Airport Shanghai Pudong Airport 6,366 109.5%

The Vietnam Airlines Group is still by far the largest player in the Cambodian market as it has a 49% stake in flag airline Cambodia Angkor Air, which accounts for another 12% share of scheduled seat capacity in Cambodia’s international market.

In the next report in this series CAPA will examine Cambodia Angkor Air and Cambodia’s other airlines, which primarily operate charters and are planning to expand in 2016 with a focus on China.

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