Series of Travel Warnings Raised for Gumi Area... Major Airlines Tense as "What Was Expected Has Come"

National Major Airlines' Sales Share in Gumi Region 40~50% "Concerns Over Impact"

[Image source=Yonhap News]

[Asia Economy Reporter Yoo Je-hoon] As the spread of the novel coronavirus infection (COVID-19) has led Western countries to raise travel alerts for Korea, major airlines are becoming tense. This is because if the trans-Pacific and trans-Atlantic routes, which account for 40-50% of annual passenger revenue, are shaken by the impact of COVID-19, the profitability of each airline is bound to plummet.

According to the aviation industry on the 26th, the U.S. Centers for Disease Control and Prevention (CDC) and the French Ministry of Foreign Affairs recently raised their travel alerts for Korea to Level 3. The Level 3 alert issued by the U.S. CDC and the French Ministry of Foreign Affairs corresponds to a 'travel caution recommendation.'

Other Western countries besides the U.S. and France are also strengthening entry controls. The United Kingdom has made self-quarantine mandatory for passengers entering via Daegu and Cheongdo, where COVID-19 outbreaks occurred, and requires them to report to the National Health Service (NHS). Germany has also requested its citizens to postpone travel to Daegu and Cheongdo. Although not a Western country, Israel, which also operates long-haul routes, has outright banned entry of Koreans.

Major airlines are in a tense mood, saying "what was expected has come."

While demand decline had been noticeable on some routes shared with low-cost carriers (LCCs) such as China, Hong Kong, Taiwan, Mongolia, and Southeast Asia, there is now a growing possibility that demand on Western routes, which had been the exclusive domain of major airlines, will also decrease.

An official from a Korean airline said, "It has only been a few days since the related measures were implemented, so changes are still minimal, but it is only a matter of time before there is a direct impact on Western inbound demand (overseas → Korea) and sixth freedom demand (overseas → Korea → third country). This is a concern as we enter the peak season from March, when demand should be increasing."

In fact, as of the fourth quarter of last year, the proportion of passenger revenue from the Americas and Europe for Korean Air was 29% and 19%, respectively, totaling 48%. Asiana Airlines also recorded 21% and 16% for the Americas and Europe, respectively, as of the third quarter of last year. Particularly, European routes tend to have a relatively high proportion of domestic passengers, but for trans-Pacific routes, due to joint ventures (JV) and alliances, the inbound proportion is relatively high, raising concerns that recent strengthened measures by various countries could cause greater damage.

There are additional negative factors. In the case of Korean Air, anxiety is growing as it was reported that a flight attendant who tested positive for COVID-19 was assigned to the Incheon?Los Angeles (LA) route. Asiana Airlines will also suspend operations on the Incheon?San Francisco route for 45 days starting in March, making some losses inevitable. This is due to the Ministry of Land, Infrastructure and Transport's suspension order following the 2014 San Francisco airport landing accident.

Major airlines are busy preparing countermeasures. Depending on future demand forecasts, they are reportedly considering various options such as reducing deployed aircraft or changing schedules. They plan to respond by cutting supply.

Professor Heo Hee-young of Korea Aerospace University said, "Considering that short-haul routes were the playground of LCCs while long-haul routes were the main source of revenue for major airlines, the impact is expected to be significant," adding, "Due to the nature of infectious diseases, there are limits to what our diplomatic authorities can do, so it seems we have no choice but to wait for COVID-19 to subside for the time being."

This content was produced with the assistance of AI translation services.