Local airlines are worried about reduced tourist demand for flights to Southeast Asia, as multiple reports of Koreans tortured and abducted in Cambodia escalate tourists’ fears.
Low-cost carriers (LCCs) with a heavy sales reliance on Southeast Asian countries are particularly exposed to the abrupt shift in sentiment on travel to Cambodia, as it may disrupt travel not just to Cambodia but also Vietnam and Thailand — two particularly popular destinations for Korean overseas travelers.
According to data from the Ministry of Land, Infrastructure and Transport, more than 1.95 million tourists visited Southeast Asia in August, the second highest after Japan, which topped the list with 2.16 million.
Compared to full-service carriers, LCCs have a limited revenue structure, generating most earnings from the operation of passenger routes to mid- to short-haul routes and limited long-haul flights.
Even if fears surrounding Cambodia do not have an immediate influence on earnings, the situation bodes ill for the budget airlines’ earnings outlook.
According to data from market tracker FnGuide, most LCCs are forecasting a drastic earnings fall in the third quarter. Jeju Air is estimated to report 16.8 billion won ($11.8 million) in operating profit between July and September, down 57.4 percent from the previous year. Jin Air’s profits are also expected to drop 35.3 percent during the same period.
As the reports of Korean nationals abducted in Cambodia make headlines, tourism agencies are also becoming more vigilant. According to data from travel agency Hana Tour, Southeast Asia accounted for 45 percent of its all package tour products in the fourth quarter of last year.
Data from the Ministry of Foreign Affairs showed that the number of reported abductions of Korean nationals in Cambodia surged from less than 20 in 2023 to 220 as of 2024. This year has seen an even more dramatic increase, with more than 330 people reported missing between January and August.
Industry officials expect the latest news from Cambodia to shrink demand for trips to Southeast Asia.
“Most travel agencies are watching the issue carefully, as Cambodia is located very close to Vietnam and Thailand,” an official from the tourism industry said. “The two countries are major cash cows for tourism business operators. If the issue continues to make headlines for a long period of time, this will affect earnings for travel agencies in the end.”
