In a bid to bolster Cambodia’s aviation sector, AirAsia launched its latest franchise in the country on May 2, aiming to revive a market that has lagged behind its Southeast Asian neighbors in recovering from the pandemic’s impact.
Despite the challenges, AirAsia’s entry signals a vote of confidence in Cambodia’s potential. Analysis of data from OAG Schedules Analyser reveals that while the country’s aviation capacity in 2023 was only 43.8% of 2019 levels, a significant improvement was seen from the previous year, with a 200% rise in departure seats. However, as of May 2024, capacity remains 45% lower than five years ago, with the domestic market particularly affected, trailing 80% below May 2019 levels.
One key factor contributing to Cambodia’s slower recovery is the downturn in mainland China’s outbound leisure market, which was the country’s largest international market in 2019, accounting for 38% of all international seats. Currently, China stands as the second-largest market from Cambodia, with a 70% capacity drop compared to pre-crisis levels. In contrast, other top markets like Thailand and Singapore have shown more resilience, nearing or even exceeding pre-pandemic capacities.
AirAsia Group’s affiliates play a significant role in Cambodia’s international capacity, commanding about 13.1% of the market share this month, making it the largest international operator in the country. The new Cambodian affiliate, a partnership between AirAsia and Sivilai Asia, plans to expand its network cautiously, with routes to Singapore expected initially, followed by destinations in China, Japan, South Korea, and Vietnam.
The move comes at a time when the country’s aviation sector is in dire need of revitalization. Cambodia Angkor Air was the country’s sole scheduled operator before AirAsia’s entry, with limited domestic routes. AirAsia Cambodia now aims to fill this gap, operating twice daily Phnom Penh-Siem Reap and Siem Reap-Sihanoukville routes, becoming the sole provider of low-cost seats in the domestic market.
Despite the potential for growth, AirAsia has highlighted the high operational costs in Cambodia compared to other Southeast Asian countries, which could hamper the country’s tourism sector. The airline has called for government incentives to lower operational costs and support local carriers, pointing out that Cambodia’s additional charges exceed those of neighboring countries.
In conclusion, AirAsia’s foray into Cambodia represents a significant milestone for the country’s aviation sector, offering hope for a robust recovery and future growth. As Cambodia continues to navigate its post-pandemic aviation landscape, partnerships and initiatives like AirAsia’s franchise will play a crucial role in shaping its aviation future.
(Source: Aviation Week | Bloomberg | Airline Ratings)
