Government Provides Additional 500 Billion KRW Support to Aviation Industry Affected by COVID-19

[Asia Economy Reporter Yoo In-ho] The government will provide an additional support of up to 508.1 billion KRW by extending the reduction of airport facility usage fees and other measures for the domestic aviation industry, which has been struggling since the global spread of the coronavirus disease (COVID-19).

On the 27th, the Ministry of Land, Infrastructure and Transport presented and announced the "Support Plan for Employment, Management Stability, and Competitiveness Enhancement in the Aviation Industry," jointly prepared by related ministries, at the 15th Emergency Economic Central Countermeasures Headquarters meeting held at the Government Seoul Office.

Earlier, on the 20th, the government held an Employment Policy Council meeting and decided to extend employment stability support measures, considering that the aviation industry is one of the sectors most severely affected by COVID-19.

The designation period for special employment support industries, including air passenger transportation and aircraft handling, was extended by six months until March next year. For air passenger transportation and aircraft handling industries designated as special employment support industries, the employment retention subsidy will also be extended by 60 days this year.

The Ministry of Land, Infrastructure and Transport explained the background of this support plan, stating, "Although the urgent crisis situation in the first half of the year has been resolved, the aviation industry still faces a survival crisis as international passenger performance, which accounts for a large portion of airline revenue, continues to decline by more than 97% compared to the previous year. Therefore, additional support is necessary for employment and management stability."

Accordingly, the government plans to provide liquidity funds in the second half of the year by utilizing financial support programs from policy financial institutions such as the Industrial Stabilization Fund and P-CBO, based on airlines' employment stability and self-help efforts.

Financial support for ground handling companies (aircraft handling industry) will also be expanded to maintain the aviation transport industry ecosystem. The government will promptly support the insufficient funds for small and medium-sized ground handling companies through the "Industrial Stabilization Fund Partner Support Program," which was implemented on the 5th.

In particular, due to the prolonged COVID-19 pandemic, the government will extend the reduction and deferral of airport facility usage fees and commercial facility rents for duty-free shops and others that make up the airport ecosystem, including airlines and ground handling companies. From March to the end of July this year, a total of 314.8 billion KRW in usage fees and rents were reduced, and 315.4 billion KRW, including air navigation safety facility usage fees, were deferred.

First, the government decided to further reduce parking fees and landing fees for airlines (20% reduction for Incheon International Airport Corporation, 10% for Korea Airports Corporation) and apron usage fees for ground handling companies (full reduction) until December this year.

The deferral of payment for ground handling companies' on-premises business fees and airlines' apron usage fees will also be extended by four months, allowing payment from January to June next year.

For commercial facilities within airports (duty-free shops, banks, in-flight catering, car rentals, fueling facilities, etc.), the rent reduction rate will be expanded proportionally to the decrease in passenger numbers, regardless of company size.

The full rent exemption benefit, previously applicable only to small and medium-sized enterprises and small business owners at airports where operations were completely suspended, will be extended to large and medium-sized enterprises, supporting up to 40.6 billion KRW.

In this case, the rent reduction effect for commercial facilities such as duty-free shops and banks will increase from the existing 415.6 billion KRW to 845.2 billion KRW, providing an additional reduction benefit of 429.6 billion KRW.

Furthermore, the government announced mid- to long-term policy support plans. Domestic airlines do not have domestic passenger aircraft manufacturing or leasing companies and operate relatively small fleets, which has led to increased operating costs and rising debt ratios due to leasing aircraft at high prices from overseas leasing companies.

To resolve these structural issues within the industry, the government plans to establish the "Aviation Industry Development Association (Aviation Association)" to provide public guarantees to reduce aircraft lease fees. It also plans to create investment funds for the coexistence of the aviation industry ecosystem and promote joint fuel purchasing to reduce costs.

Son Myung-soo, the 2nd Vice Minister of the Ministry of Land, Infrastructure and Transport, said, "Since it is expected to take longer than anticipated for international flights to resume and passenger demand to recover,

this additional support measure for the aviation industry is expected to alleviate the burden on the aviation sector," adding, "The aviation industry should prioritize employment stability to ensure that the damage caused by COVID-19 is not passed on to workers."

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