[Deputy Editor's Column] Does the Aviation Industry Want to See the End?

[Asia Economy Reporter Yoo In-ho] On the 18th, the Ministry of Land, Infrastructure and Transport announced additional support measures for the aviation industry struggling due to the novel coronavirus infection (COVID-19).

The core of the additional support measures included approximately 20.7 billion KRW in additional reductions of parking and landing fees and about 385.1 billion KRW in payment deferrals. The Ministry emphasized in the announcement that "when combined with existing support measures, the total amounts to 566.1 billion KRW (66.5 billion KRW in reductions and 500.5 billion KRW in payment deferrals)."

The aviation industry's response to the government's additional support measures was cold. The industry believes this level of support is insufficient. They are appealing for direct financial injections to operate their companies rather than indirect support measures such as tax reductions or rent payment deferrals.

The situation of domestic airlines is dire. Eastar Jet, one of the domestic low-cost carriers (LCCs), could not withstand the COVID-19 crisis and eventually suspended even domestic flights. It was the first domestic airline to declare a shutdown (business suspension).

Other airlines do not see Eastar Jet's shutdown as someone else's problem. As the COVID-19 crisis prolongs, they may be forced into a shutdown situation as well.

The problem is that the financial difficulties of airlines are spreading to downstream industries. The liquidity crisis of airlines affects partner companies that handle airport ground services, in-flight cleaning, and counter check-in operations.

Because airlines lack funds, they are unable to pay partner companies and ground service providers on time. Ground service providers earn money each time an aircraft takes off and lands, but with over 80% of routes canceled, their sales have dropped by more than 60%, resulting in monthly losses exceeding 10 billion KRW.

Despite this situation, the government's support measures are at the level of "a drop in the bucket." Even when combining all government support such as fee reductions, each company receives about 100 million KRW. This is not an effective measure when there is no money to cover immediate expenses such as labor costs, aircraft lease fees, fuel costs, various parts costs, and facility usage fees.

In this context, there are calls for the government to once again review the aviation industry support measures of the United States and European Union (EU) countries. Germany has provided unlimited financial support to its airlines, France has announced support measures worth 1.1 billion euros (about 1.5 trillion KRW), and the United States is considering a 50 billion dollar (about 60 trillion KRW) support promise along with unsecured and interest-free loans, as well as reductions and deferrals of aviation fuel taxes.

It is not too late now. We hope the government abandons superficial measures and presents sincere plans before the nation's key industry, the aviation sector, goes bankrupt.

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