Despite the Aviation Industry Crisis... Concerns Raised Over the Effectiveness of Government Support Measures

On the 24th of last month, Eastar Jet decided to suspend all domestic flights following the suspension of international flights due to the spread of COVID-19. It is the first shutdown among Korean airlines. On that day, the Eastar Jet ticket counter at the domestic terminal of Gimpo Airport in Gangseo-gu, Seoul, was quiet. Photo by Moon Honam munonam@

[Asia Economy Reporter Lee Chun-hee] The aviation industry has fallen into crisis due to a sharp decline in air travel demand caused by the spread of the novel coronavirus infection (COVID-19), but government support measures have been criticized as insufficient.

On the 2nd, the National Assembly Legislative Research Office published a report titled "Current Status and Challenges of COVID-19 Related Aviation Industry Support," evaluating the government's support measures as "able to reduce the burden on the aviation industry caused by COVID-19 damage, but insufficient compared to the severity of the damage."

The report estimated that with the spread of COVID-19 causing a sharp drop in passenger demand, the revenue loss for Korean airlines is expected to reach at least 6.3 trillion won by June. It warned that if this situation continues, "there is concern that airlines may go bankrupt and the international aviation network could collapse."

On February 17, the government announced support measures for the aviation industry, including 300 billion won in financial support for low-cost carriers (LCCs), deferral of the revocation of traffic rights and slots, and deferral of airport usage fees and fines. Subsequently, on the 18th of last month, the government expanded the deferral of traffic rights and slot revocation from China routes to all routes, increased airport fee reductions, and announced support measures for ground handling companies.

▲ Key points of the 'Emergency Support Measures for Aviation and Shipping' announced by the government on February 17 through the Economic Ministers' Meeting on COVID-19 Response.

However, the report questioned the effectiveness of these measures. In a situation where aircraft operations themselves are decreasing, reducing landing fees charged upon airport landing or deferring payment of air navigation facility usage fees for airspace transit or landing may not provide immediate help. It also pointed out that the government's proposed support measures such as allocating traffic rights for route diversification or supporting the establishment of new routes have low effectiveness amid ongoing entry restrictions overseas.

The report emphasized that expanded financial support directly requested by the aviation industry and government guarantees or additional tax support for bond issuance must be implemented. Specifically, it called for ▲expanding financial support from LCCs to all airlines including full-service carriers (FSCs), ▲government payment guarantees for airline bond issuance, ▲increasing the exemption rate for property tax levied on aircraft, and ▲temporary exemption of customs duties and petroleum import charges on domestic aviation fuel.

Policy recommendations from a mid- to long-term perspective were also made. The report advised that "it is necessary to supplement systems related to the management of air transport businesses, such as checking the financial status of airlines," and "to improve related systems so that the aviation industry can have competitiveness by improving the industry's structure."

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