South Korea unveils additional support to airlines

South Korea’s government has unveiled additional measures to help the country’s airlines as they wrestle with the continuing impact of the Covid-19 pandemic on demand, the Ministry of Land, Infrastructure and Transport said in a statement. The government is also reportedly considering providing further financing to low-cost airlines of around KRW200 billion won (USD175 million). One of the measures the ministry announced in the March 3 statement was to continue to provide a discount on airport usage fees until June, totalling KRW45.7 billion (USD40 million). In addition, “for fair competition between national airlines and foreign airlines,” it will review cuts in aircraft acquisition tax and property tax, “which have continuously been requested by the industry.” Meanwhile, the confiscation of unused slots in 2021 will be postponed “so that airlines can quickly reimagine their business strategies for the post-coronavirus period.” In addition, slots at South Korean airports that non-Korean carriers are not using will be temporarily allocated to domestic flights operated by Korean airlines. Normally, South Korea’s aviation laws require airlines to use 80% of their airport slots each season and operate allocated routes at least 20 weeks per year. Passenger numbers on international routes fell by 84% in 2020 to 14.2 million, from 90.4 million the previous year, according to the ministry. Further, the ministry pledged to speed up permits for cargo operations from three days to the same day, with each airline now responsible for conducting its own risk assessment for the cargo and for submitting “evidence of the results of the risk-reduction measures.” Moreover, the ministry said it would give “customised recovery support for each airline.” For example, in order for low-cost carriers to become competitive on short-haul routes such as to East Asia, when they resume, “it is necessary to provide additional funding, which is temporarily insufficient.” Airlines will be able to discuss future support plans with related ministries for any shortfall of funds needed after the first quarter of 2021. Sources told local media that this support could amount to KRW200 billion for low-cost carriers Jeju Air, Jin Air, and T’way Air, as these LCCs are expected to have lost revenues by this amount by the third quarter of this year. Asiana Airlines’ low-cost units Air Busan and Air Seoul would obtain funding through their parent company if necessary, the sources added. In the case of start-ups Aero K and Air Premia, they have been given until the end of this year to launch operations, extended from March. Finally, the ministry promised to expand beyond Seoul Incheon permission for airlines to conduct sightseeing flights, a new trend in Korea that takes fee-paying passengers above scenic parts of the country before returning to the same airport.