High spectral resolution of hyperspectral data enables analysis of complex natural phenomena that is reflected on the data nonlinearly. Although many manifold learning methods have been developed for such problems, most methods do not consider the spatial correlation between samples that is inherent and useful in remote sensing data. We propose a manifold learning method which directly combines the spatial proximity and the spectral similarity through kernel PCA framework. A gain factor caused by spatial proximity is first modelled with a heat kernel, and is added to the original similarity computed from the spectral values of a pair of samples. Parameters are tuned with intelligent grid search (IGS) method for the derived manifold coordinates to achieve optimal classification accuracies. Of particular interest is its performance with small training size, because labelled samples are usually scarce due to its high acquisition cost. The proposed spatial kernel PCA (KPCA) is compared with PCA in terms of classification accuracy with the nearest-neighbourhood classification method.