National carrier Cambodia Angkor Air has announced the creation of a new airline, offering direct flights between Phnom Penh and the Indian capital, New Delhi. A strategic shift towards a growing clientele at a time when the travel sector is feeling the impact of China's slower-than-expected reopening.
Although the Cambodian company has not yet given details of the flight schedules, the State Secretariat for Civil Aviation confirmed to the local press that Cambodia Angkor Air had indeed received approval from the Cambodian and Indian authorities for these future air links.
The decision, hailed by the Indian embassy in Phnom Penh as a "remarkable step and a historic achievement in the strong collaboration between these two nations and likely to open up opportunities in tourism and business partnerships", comes against a backdrop of strong growth in Indian tourism as travellers from the world's most populous country flock to Southeast Asia, consolidating the country's position as a key market for a travel sector that is feeling the impact of China's slower-than-expected reopening.
A number of Thai and Vietnamese companies have realised this, and are already taking advantage of India's booming middle class and its soaring purchasing power.
According to industry experts, South-East Asia is clearly well positioned to host much of the growth that will inevitably come from India.
The travel industry remains vital to many of the region's economies, accounting for around 12% of the region's gross domestic product before the pandemic. Cambodia is slightly below this average, at 11.5%, compared to 32.7% in 2019, with annual growth of 4.7% since 2000.
The tourism sector also employs more than 40 million people in the region, and for a decade the sector was fuelled by China, but official data for Southeast Asia shows a recovery that is far too slow, with the number of Chinese visitors in 2023 around 60% lower than in 2019.
"In Thailand, Indians now account for almost 10% of the tourist clientele and this is an almost unhoped-for windfall," says the director of a major hotel chain operating worldwide and in Cambodia.
He also points out that the Kingdom also has to contend with the cost of tourist visas, whereas neighbouring Thailand and Vietnam offer free visas to certain travellers from around twenty countries.
According to industry experts, "A long-term increase in the number of Indian tourists will lead to a recalibration of airline capacity, hospitality offerings and tourism operators", and India could well become the next China "in terms of outbound tourism growth" over the next decade.
According to the Asian Development Bank, although connectivity is still limited by the small number of airports, "India will enable a historic leap in the sector this decade according to Covid".
In Thailand, where tourism is a mainstay of the economy, the number of Indian tourists - although lower than the Chinese in absolute terms - is only around 14% lower than it was in 2019.
Tanes Petsuwan, deputy governor of the Tourism Authority of Thailand, said 1.6 million Indians are expected to visit the kingdom this year. In May 2023, more Indians than Chinese visited Singapore, while in the same month almost 63,000 Indians visited Indonesia, compared to just over 64,000 Chinese.
"Connections with India are very important", says Chai Eamsiri, Managing Director of Thai Airways, which operates 14 flights a week with China - compared with 40 before the pandemic - and 70 flights a week with India.
Part of Thai's fleet of narrow-body aircraft, which could double over the next decade, will be deployed in India. Indian airline IndiGo, which has ordered 500 Airbus aircraft to meet regional demand, said it had seen a "sharp increase" in routes between India and Southeast Asia, which it connects with more than 100 flights a week.
Overall, seat capacity on scheduled flights between China and South-East Asia was 57% below pre-OVID levels, but flights from India to the region jumped by around 90%.
Indians are therefore making a major contribution to the post-pandemic rebound of hotel chains, including Minor Hotels, which has 45 establishments in South-East Asia and more than 6,000 rooms.
"The Indian market has become one of our main regular source markets," says CEO Dillip Rajakarier, adding that the hotel chain has stepped up its marketing throughout India.
The Royal Cambodian Embassy in India has been working closely with its Indian counterpart to reach a final decision on direct flights between the two countries.
Meanwhile, Cambodia's civil aviation authority has given the Indian carrier Indigo Air the go-ahead to operate flights between New Delhi and Siem Reap. Data from the Cambodian Ministry of Tourism shows that Cambodia welcomed 68,836 Indian visitors in 2023, an increase of more than 102% on the 34,016 visitors the previous year, but still a far cry from Thai statistics.
Meanwhile, keen to catch up, Cambodia and India have also formed a technical team to begin negotiations for a bilateral free trade agreement that would strengthen trade, investment and commercial cooperation between the two countries.
