"Airlines Should Receive Tax Cuts to Overcome COVID-19 Crisis in the Aviation Industry"

'The 12th Aviation Industry Outlook Seminar'

[Asia Economy Reporter Dongwoo Lee] Amid the ongoing downturn in the aviation industry caused by the COVID-19 pandemic, there have been calls for the government to take proactive measures to overcome the crisis, such as reducing taxes imposed on airlines.

Professor Hwang Yong-sik of the Department of Business Administration at Sejong University explained in a keynote presentation at the 12th Aviation Industry Outlook Seminar, jointly hosted by the Korea Aviation Association and the Korea Transport Institute on the 13th, that "a 'resilience' strategy is crucial to overcoming the crisis facing the aviation industry, which is confronted with survival issues due to COVID-19," and added, "a response strategy to secure cash liquidity and business continuity is necessary."

He further stated, "The industry must make self-help efforts through active employment retention and management efficiency," and added, "the government should take a more active role so that our airlines can compete fairly and soundly with foreign airlines in a level playing field."

Professor Hwang emphasized that the government should reduce tariffs on aircraft parts and local taxes on aircraft, which are not imposed by competing countries. Currently, under Article 65 of the Local Tax Special Cases Act, the government has been reducing acquisition tax on aircraft by 60% since 2017, and property tax is reduced by 50% only for low-cost carriers.

According to Professor Hwang, countries such as Australia, Singapore, and China reduce tariffs on aircraft parts through domestic laws, while the United States, Canada, and Japan are exempt from tariffs under the Trade in Civil Aircraft Agreement (TCA) within the World Trade Organization (WTO).

Han Jae-hyun, Center Director at the Korea Transport Institute, forecasted, "Domestic passenger numbers are expected to recover to about 94% of the 2019 passenger demand this year," and "international passenger numbers could recover up to 47% compared to 2019 next year."

Domestic passenger demand is expected to return to pre-COVID-19 levels within this year. Director Han said, "Domestic passenger numbers in 2021 are predicted to recover to about 94% of the 2019 passenger demand."

Seong Yeon-young, Executive Director of the Korea Aviation Association, emphasized, "Volatility regarding the opening of the aviation market is increasing recently due to variant viruses," and stressed, "it is necessary to proactively prepare response strategies for the post-COVID-19 era, such as establishing marketing strategies and optimizing airline route operations."

The Aviation Industry Outlook Seminar is held annually to explore directions for the development of the aviation industry. This year, it was conducted under the theme of "Strengthening the Competitiveness of Korea's Aviation Industry after COVID-19."

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