Amid freefall, airlines pleading for help

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Amid freefall, airlines pleading for help

Korea’s airlines on Friday asked the government for a new round of supportive measures, as the coronavirus pandemic’s effect on travel takes an increasingly grave toll on the travel industry.

The Korea Civil Aviation Association, the trade group that represents the nation’s air carriers, asked for a range of policies favorable to the industry, including an expansion of collateral-free loans, government-guaranteed bonds and tax exemptions, including the aircraft property tax.

“The foundation of the domestic aviation industry is collapsing and 840,000 people engaged in aviation and related fields are facing fears of unemployment,” the organization said in the statement. “Airlines and employees are attempting to share the pain by going on a paid-unpaid vacation or voluntarily returning their salary. But [the impact] of Covid-19 is powerful enough to collapse the industry’s foundation.”

Last month, the government provided a soft bailout to the hard-hit industry. The measures included waiving fees and allowing carriers to maintain the rights for routes and slots that they would otherwise lose for lack of use.

As infection-wary customers avoid travel and countries have announced waves of travel restrictions and bans, the number of both domestic and international flights has fallen dramatically.

During the week that ended March 29, the number of passengers on international flights in Korea was just 75,482, a 95.6 percent drop from the same period in 2019.

“Almost earning no profit at this point, the aviation industry is faced with 900 billion won [$804 million] in monthly fixed costs,” the association’s statement noted. “Loans coming in due by the end of the year sums 5.3 trillion won, leaving airlines and employees concerned.”

The Sydney-based CAPA Centre for Aviation warned last month that the majority of the world’s airlines will by bankrupt by May without government support. The International Air Transport Association last month estimated that airline passenger revenue worldwide will fall $252 this year.

The aviation industry in the United States will be allocated up to $58 billion, including $25 billion for passenger air carriers, $4 billion for cargo air carriers and $3 billion for airline contractors. Singapore Airlines obtained $2.8 billion in loans from DBS Group Holdings, while the Chinese government pledged $14.4 billion to the country’s aviation businesses.

“Aviation is a nation’s key industry that covers its security and economy,” the trade group said. “It plays a pivotal role in taking care of 97 percent of international passengers and 30 percent of export-import sales. As much as it is an industry that drives the creation of 840,000 jobs in aviation and related fields, it must be protected.”

At Asiana Airlines, the company’s pilot labor union recently agreed to a 50 percent wage cut in April, following the union’s earlier offer to go on unpaid vacation for 10 days monthly from April through June.

In March, Asiana Airlines employees were forced to take unpaid leave for 10 days. Since March, its president Han Chang-soo had to return his entire salary while executives returned half of their salaries. They will return 60 percent of their salaries in April.

The Fair Trade Commission on Friday approved HDC Hyundai Development Company’s acquisition of shares of Asiana Airlines. In December, HDC inked a deal to purchase 61.5 percent of the airline’s shares, and reported it to the antitrust government in January.

The agency said HDC’s acquisition will not “disturb competition” since HDC’s core business is engineering and construction.

BY JIN MIN-JE, KWAK JAE-MIN [jin.minji@joongang.co.kr]

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