With the Reality of the 3rd Wave of COVID-19... The 'Last Stronghold' Domestic Flights Also Shaken

"Trajectory Similar to the Second Wave in August"

[Image source=Yonhap News]

[Asia Economy Reporter Yu Je-hoon] As the third wave of the novel coronavirus infection (COVID-19) becomes a reality, the domestic airline market, which was the 'last stronghold' of the aviation industry, is also taking a direct hit.

According to the Jeju Special Self-Governing Province Tourism Association on the 7th, the cumulative number of visitors to Jeju Island from the 1st to the 6th was 150,074 (based on domestic visitors), a 24.9% decrease compared to the same period last year. After the second wave that began with the Sarang Jeil Church and Gwanghwamun rallies in September, Jeju visitors showed a clear recovery trend in September (-29.0%), October (-14.1%), and November (-3.4%), but now they are at a turning point heading downward again.

The cause of this decline in passenger demand is attributed to the strengthening of social distancing measures due to the third wave of COVID-19. In fact, around the 22nd, when the social distancing level in the metropolitan area was raised to level 2, the number of Jeju visitors, which had once shown growth compared to the previous year, reversed back to negative.

Since Jeju routes account for 60-70% of all domestic passengers, the impact on the aviation industry is expected to be significant. This situation inevitably affects not only domestic flights but also domestic and international sightseeing flights that each airline has been preparing diligently. An industry insider said, "Inquiries about cancellations increased around the time the metropolitan area was raised to level 2. It's a repeat of the second wave in August," adding, "If social distancing is adjusted to level 2.5 in the metropolitan area and level 2 in non-metropolitan areas from the 8th, the impact will likely be even greater."

The performance outlook is also not optimistic. The cumulative operating loss of six listed airlines from the first to the third quarter this year amounts to about 850 billion KRW. Recently, air cargo rates have been hovering around $7 per kg (based on the Hong Kong-North America route), allowing major airlines to somewhat reduce their losses, but low-cost carriers (LCCs), which are weak in this business sector, are only seeing their losses increase.

Therefore, attempts to maximize profitability continue in the aviation industry. Korean Air has decided to charge a service fee of 30,000 KRW for ticketing at airports and branches starting next year, and to impose additional fees for advance seat assignments such as emergency exit seats. This fee policy, once exclusive to LCCs, has recently spread to major airlines as the overall profitability of the aviation industry deteriorates. LCCs are also benchmarking major airlines and focusing all efforts on securing profitability by developing cargo businesses using existing passenger aircraft.

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