One Year of Korea-Japan Conflict... Airline Industry Facing Crisis Due to Boycott Movement and COVID-19

Korea-Japan Flights and Passengers Plummet 96% and 99%
FKCCI Urges Expansion of Airline Support to Maintain Competitiveness

Korea and Japan Suspend 'Visa-Free Entry' Starting Today...Significant Reduction in Flights
On the morning of the 9th, as Korea and Japan both strengthened entry restrictions against each other, the air routes between the two countries were virtually closed. The usage rate of Incheon International Airport dropped to one-sixth of the usual level, with aircraft lined up at the Incheon Airport maintenance hangar. 2020.3.9.
Photo by XXX

[Asia Economy Reporter Yu Je-hoon] The aviation industry is heading toward a crisis of collapse as it faces not only the ongoing Korea-Japan conflict over the past year but also the turbulent challenge of the novel coronavirus disease (COVID-19) in the first half of this year.

According to the Ministry of Land, Infrastructure and Transport's Aviation Information Portal System on the 29th, the number of flights between Korea and Japan in May was 416 (passenger + cargo), with only 6,797 passengers. This represents a decrease of 96.3% and 99.6%, respectively, compared to the same period last year.

This is due to the closure of air routes between the two countries caused by COVID-19. As of this day, there are only two air routes operating between the two countries: Incheon~Narita (Tokyo) and Incheon~Kansai (Osaka), with Korean Air, Asiana Airlines, and Jeju Air maintaining limited operations. This followed Japan's decision in March to open only Narita and Kansai International Airports to strengthen controls on arrivals from Korea and China.

In March, both countries also suspended the validity of entry visas (certificates) that had been agreed upon to promote economic exchange and tourism. An industry official stated, "Currently, flights to Japan are mainly carrying limited passengers such as overseas Koreans, permanent residents, international students, and official government travelers."

At one time, the Korea-Japan route was called the "golden goose" as it played a leading role in the growth of Korean national airlines, especially low-cost carriers (LCCs). According to the Korea Tourism Organization, the number of Korean nationals visiting Japan, which was about 4 million in 2015, peaked at approximately 7.53 million in 2018.

However, following Japan's export restrictions against Korea, the air routes between the two countries suffered record damage. Last year, the number of Korean nationals visiting Japan decreased by 25.9% from the previous year to about 5.58 million, returning to 2016 levels. This was due to the full-scale boycott of travel to Japan amid the Korea-Japan conflict.

As a result, oversupply occurred on routes such as Southeast Asia, and LCCs focusing on short-haul routes in the fourth quarter posted losses ranging from tens to hundreds of billions of won: Jeju Air 45.1 billion won, Jin Air 60.1 billion won, T'way Air 21 billion won, and Air Busan 1.9 billion won. The industry evaluates that Eastar Jet's initiation of the sale process is also due to the deteriorating business environment.

In particular, COVID-19 dealt a fatal blow to national airlines already wounded by the Korea-Japan conflict. As of May, the total number of international flights was 7,751, with 138,447 passengers, down 83% and 98%, respectively, from the previous year. Due to this impact, no national airline posted operating profits in the first quarter, and operating losses of hundreds of billions to trillions of won are expected in the second quarter.

Meanwhile, although the aviation industry is pushed to the brink of collapse, the scale of government support relative to the assets of domestic airlines is significantly lower than that of major overseas countries. According to an analysis by the Federation of Korean Industries (FKI), the ratio of government support (3.2 trillion won) to assets (44.9 trillion won) of seven domestic airlines is 7.1%, which is lower than that of U.S., French, and German national carriers (12.4% to 22.8%).

Yoo Hwan-ik, head of the Corporate Policy Office at FKI, emphasized, "Major countries prioritize support for the aviation industry as an important key industry. Korea should also actively utilize the Industrial Stabilization Fund, Special Purpose Vehicle (SPV), and expand support scale, while reforming the tax system and supporting industrial restructuring by the market to maintain competitiveness of our aviation industry in the post-COVID era."

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