Repeated Overseas Entry Restrictions... LCCs with Nowhere to Go "SOS"

Vietnam, Thailand, Taiwan and Other LCC Key Regions All Under Stronger Korean Control
"Some Companies May Not Survive in 1-2 Months"

[Image source=Yonhap News]

[Asia Economy Reporter Yoo Je-hoon] As the novel coronavirus infection (COVID-19) rapidly spreads in South Korea, various countries around the world are strengthening entry restrictions on travelers from Korea. Low-cost carriers (LCCs), which have lost destinations due to tightened controls at major routes, are sending rescue requests to the government, asking for "unconditional emergency financial support."

According to the aviation industry on the 29th, since the rapid spread of COVID-19 centered around Daegu and Gyeongbuk, a total of 52 countries worldwide have strengthened controls by banning entry or tightening entry procedures for travelers from Korea as of the previous day.

In particular, LCCs, which have been experiencing demand shrinkage due to the boycott of travel to Japan and the spread of COVID-19 in China, are now facing a crisis as even Southeast Asian countries, their last demand markets, are tightening entry restrictions.

In fact, Vietnam, where LCCs have recently been focusing, decided to temporarily suspend visa-free entry for Koreans starting from this day. This is the first time in 16 years since 2004, when Vietnamese authorities allowed visa-free entry for Koreans for 15 days.

Other countries classified as part of the Southeast Asian region are similar. Hong Kong has banned entry of foreigners who have visited Korea within the last 14 days, the Philippines has banned entry of travelers from Gyeongsangbuk-do, and Taiwan and Thailand have imposed 14-day self-quarantine measures on foreigners who have passed through Korea.

As major demand markets strengthen entry restrictions, LCCs are actively appealing for government support. Following a large-scale refund crisis, the near-distance demand that generates cash income has shrunk, putting them at a crossroads for survival. Professor Lee Hwi-young of Inha Technical College pointed out, "In the case of LCCs, cash circulation lasts about a week, so the financial impact from entry bans inevitably returns faster compared to major airlines."

In fact, the CEOs of six LCCs?Jeju Air, Jin Air, T'way Air, Air Busan, Eastar Jet, and Air Seoul?issued a "Joint Emergency Proposal for Overcoming the COVID-19 Crisis for LCCs" the day before, stating, "Airlines are sharing the pain with over 10,000 employees through wage cuts and leaves of absence along with self-help measures to overcome the COVID-19 crisis, but efforts alone are insufficient," and demanded support measures.

The CEOs also requested three measures: ▲ emergency management stabilization funds with no collateral and long-term low-interest conditions ▲ exemption of airport facility usage fees and parking fees, and reduction of various taxes (such as aircraft property tax and aviation fuel import duties) ▲ temporary increase of the employment retention subsidy rate (expanded from the current half to two-thirds). They asked to lower the barriers to fund circulation to quickly escape the liquidity crisis and reduce fixed costs through exemptions of various facility usage fees and taxes. The expansion of the employment retention subsidy rate is interpreted as considering idle personnel due to future expanded flight suspensions.

An industry official said, "The current measures prepared by the authorities are even weaker compared to those during the 9/11 terror attacks in 2001 and the Severe Acute Respiratory Syndrome (SARS) in 2003," adding, "As companies that will have to worry about bankruptcy in one to two months are emerging one after another, timely and appropriate support is necessary."

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