Passengers on the Sky Road Cry While Cargo Laughs... It Continues This Year Too

Compared to 2019, Air Passengers in 2020 Decreased by 68%... Cargo Excluding Baggage and Mail Increased Net

On the 8th, a plane is flying over the silver grass field in the Sky Garden at Incheon Airport under clear weather. Photo by Mun Ho-nam munonam@

[Asia Economy Reporter Yoo Je-hoon] The new coronavirus infection (COVID-19) crisis caused a polarization in air passenger and cargo performance last year. As the impact of COVID-19 continues this year, the contrast between large airlines with cargo operations and LCCs without such operations is expected to become even clearer.

According to the Ministry of Land, Infrastructure and Transport's Aviation Information Portal System on the 12th, the total number of passengers at 15 airports nationwide last year (domestic departures and international departures and arrivals combined) was 39,403,960, down 68.1% from the previous year. Among routes, international flights, which were hit hardest by COVID-19, decreased by 84.2% to 14,315,695 passengers. This is the lowest figure in 22 years since 1998. Domestic flights, which were relatively less affected by COVID-19, also decreased by 24.0% to 25,355,684 passengers.

On the other hand, cargo performed relatively well despite the COVID-19 crisis. Total cargo decreased by 23.9% to about 3.25 million tons, but cargo excluding checked baggage (luggage carried by travelers) and mail increased by 0.99% to about 2.84 million tons despite the impact of COVID-19. A representative from Incheon International Airport Corporation said, "The main reason for the increase in cargo volume is the global economic recovery phase starting around June last year after the COVID-19 pandemic," adding, "Deferred cargo demand from China, the world's largest producer, also played a role in raising cargo volume levels."

This gap is likely to widen further this year. The prolonged COVID-19 crisis makes passenger demand recovery uncertain. In particular, last year's statistics include the performance of January and February, when normal operations were possible before the spread of COVID-19, creating an optical illusion. Based on the period after March last year, when COVID-19 spread in earnest, the passenger decline rate sharply increased to 25.3% for domestic flights and 96.8% for international flights.

In contrast, the air cargo sector is expected to continue its strong performance this year. With COVID-19 vaccines being produced and distributed in earnest, related transportation demand is expected to increase. Additionally, the delay in passenger demand recovery means that belly cargo (cargo hold under passenger aircraft) supply has not increased significantly, keeping freight rates at a high level. According to Hana Financial Investment, at the beginning of this month, air cargo freight rate increases were solid at 133.8% for trans-Pacific routes and 56.0% for European routes.

An industry insider said, "The supply-demand effect due to basic supply shortages is significant," adding, "As airlines worldwide increase cargo supply, freight rates are likely to enter a stabilization phase, but a sharp adjustment is not expected."

This trend is expected to differentiate the fortunes of Korean airlines. Large airlines operating cargo businesses are expected to post profits or reduce losses. In fact, securities firms estimate that Korean Air posted an operating profit of 102 billion KRW in the fourth quarter, supported by strong cargo business performance. LCCs, which rely heavily on the passenger sector, are expected to continue struggling this year.

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