'LCC' Relieved by Extension of Employment Retention Subsidy

Relief for Deficit LCCs as Employment Subsidies Extended
Asiana Also Maintains Support... Excluding Korean Air with '2 Years of Profit'

[Image source=Yonhap News]

[Asia Economy Reporter Yoo Hyun-seok] The Ministry of Employment and Labor has decided to provide employment retention subsidies for three consecutive years to companies experiencing deteriorating business conditions, offering some relief to low-cost carriers (LCCs). This decision is like a blessing for LCCs whose business conditions have worsened due to COVID-19 and other factors. The industry also welcomes the government's decision.

On the 22nd, An Kyung-duk, Minister of Employment and Labor, stated, "We will continue to provide employment retention subsidies in the third year to companies facing difficult business conditions due to the spread of Omicron, regardless of company size."

The employment retention subsidy is a system where the government supports part of the leave allowance when employers facing temporary business difficulties maintain employment by implementing temporary closures or leaves. Jeju Air, Jin Air, and T'way Air have been designated as special employment support industries due to the spread of COVID-19 and have been receiving employment retention subsidies from the government since March 2020.

LCCs are currently experiencing worsened business conditions due to COVID-19 and other factors. The securities industry estimated that Jeju Air recorded sales of 267.2 billion KRW and an operating loss of 323.2 billion KRW last year. T'way Air and Jin Air are estimated to have recorded sales of 206 billion KRW and 240.4 billion KRW, respectively, with losses of 157 billion KRW and 194.9 billion KRW.

The LCC industry welcomes the government's decision. An LCC industry official said, "It is a grateful decision that the government understands the difficulties the aviation industry is still facing due to COVID-19 and has extended the support period," adding, "We hope that stable employment retention support measures will be maintained until the industry recovers to secure the competitiveness of the aviation industry."

Another official explained, "We appreciate the government's decision to consider the difficulties of the aviation industry," and said, "We plan to make necessary preparations in line with the decision to maintain support."

Meanwhile, in this extension of the employment retention subsidy, Asiana Airlines is expected to be eligible for support, but Korean Air is likely to be excluded. The Ministry of Employment and Labor has established additional support criteria for large companies whose employment retention subsidy support is scheduled to be discontinued. According to the criteria, large companies are eligible for employment retention subsidies if their sales decrease by more than 15% per company and if △ their 2021 performance was in the red or △ even if profitable, their net income was negative. However, companies that posted profits consecutively in 2020 and 2021 will be excluded from support as the necessity of support is not recognized.

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