Ministries buying up airline tickets
The Ministry of Land, Infrastructure and Transport announced in a statement Sunday that it will spend 1.55 billion won ($1.27 million) to make early purchases of flight tickets from local airlines. The amount equates to 85 percent of the ministry’s annual flight budget. Under the measure to be officiated in signed agreements starting Monday, government agencies will purchase flight tickets for business travel in advance. The government will book 30 percent of domestic flight tickets from low-cost carriers.
The ministry said it will work to eventually draw around 160 billion won from all government agencies to be used to purchase flight tickets.
“The early purchases of plane tickets from the central government, local agencies and public institutions could be a great help for airline companies that are facing a temporary liquidity crisis,” said Kim Yi-tak, an airline policy official at the ministry.
Korea’s airlines have been asking the government for help with supportive measures as the ongoing pandemic has taken a toll on the travel industry.
Companies have been sending their employees on unpaid leave and started cutting salaries, with most of them entering emergency management.
In March alone, passengers traveling on Korean airlines dropped an estimated 91.5 percent compared to the same period a year earlier, to 648,000.
The International Civil Aviation Organization, a specialized agency under the United Nations, predicted last month that Korea’s airline industry could lose up to $5.8 billion in revenue during the first half of this year while its number of passengers could fall by up to 28 million from an expectation of 45.94 million passengers from January to June.
The National Assembly passed a bill Thursday that will allow the state-run Korea Development Bank (KDB) to create a 40 trillion won fund to invest in industries considered essential to the economy including automobiles, airlines and steel.
The KDB and the Export-Import Bank of Korea late last month agreed to provide 1.7 trillion won in loans to Asiana Airlines. The airline is extending the furlough of employees indefinitely, meaning that around 8,000 workers are required to take unpaid leave for months.
The two state-run creditors also announced earlier they will lend 1.2 trillion won to Korean Air Lines. Korean Air Lines has halted the operation of most of its international routes, representing about 94 percent of its passenger business.
BY KO JUN-TAE [firstname.lastname@example.org]
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