Japanese airlines bank on better Korea relations

Japanese air carriers consider improving their relationship with Korea to be more important than solving the weak yen problem in order to increase business with their neighbor.

According to data from the Korea Immigration Service, 788,654 Japanese visited the country in the first four months of this year, down 13.8 percent from a year ago. Japanese are the second-biggest foreign visitors to Korea after China.

With a weak yen, Japanese carriers said that they are suffering from fuel and aircraft costs, but when it comes to business with Korea, prices weren’t a top concern.

“I think political and historical tension between the two countries has a bigger impact than the weak yen when it comes to doing business with Korea compared to other countries,” All Nippon Airways (ANA) President and CEO Osamu Shinobe told the Korea JoongAng Daily at the International Air Transport Association’s 70th Annual General Meeting in Doha on Monday. “As an airline, there’s nothing we can do about it besides hope to see positive media reports come out and also a change in public sentiment.”

Since Japanese Prime Minister Shinzo Abe took charge with his nationalistic party, the country’s relationship with Korea has worsened.

The Korea Tourism Organization has said that the declining number of Japanese visitors can also be explained by “less Korea-favoring in Japan.”

The situation is not only a blow to Japanese air carriers, but also to Korean airlines, which are transporting fewer passengers.

Last year, Korean Air Lines, the nation’s largest air carrier, said 3.91 million passengers flew to and from Japan on its aircraft, down 15.4 percent from 2012. Asiana Airlines, Korea’s No. 2 carrier, reported a 5.5 percent decline in its Japan flights.

Since last year, two local airlines have shut down some of their routes to Japan, citing low demand and cost effectiveness.

Their poor performance on routes to Japan was replaced by strong demand from China.

In order to improve, KAL said it is expanding code sharing with Japan Airlines (JAL) from 16 to 24 routes, although they are not in the same partner group. KAL is a member of SkyTeam alliance and JAL is part of OneWorld alliance.

“I don’t think there is big competition between Korean full-service carriers and Japanese airlines,” said JAL Chairman Masaru Onishi. “The competition nowadays is more about full-service carriers and low-cost carriers.”

Onishi said that demand for air travel in Asia is increasing, but it is being driven by low-cost carriers as passengers get more price-conscious.

But behind the scenes, Japanese air carriers have started to creep into the Korean aviation market with their LCCs.

Vanilla Air and Peach Aviation, both affiliates of ANA, now fly to Korea, while Jet Star Japan, which is owned by JAL, is considering flights to Korea in the second half of the year.

BY joo kyung-don[kjoo@joongang.co.kr]