Korean airline shares surge as Japan announces easing of entry regulations

Tourists line up at Incheon International Airport on Tuesday. [NEWS1]

Shares of local airlines and tourist agencies surged on Tuesday as investors bet that Japan's move to waive tourist visa requirements will boost Korean tourism companies.

Japan used to be the top overseas tourist destination for Korean travelers between 2001 and 2018, but lost its top spot to countries such as Vietnam with its decision to stop no-visa entries during the pandemic, making the country less popular.

Shares of Hana Tour jumped 6.54 percent to 60,300 won ($45) on Tuesday, and Yellow Ballon Tour rose 3.29 percent to 8,160 won. Korean Air Lines rose 4.35 percent to 26,400 won and Asiana Airlines rose 3.18 percent to 14,600 won.

The increase follows an announcement made by Kihara Seiji, Japan’s deputy chief cabinet secretary, hinting that various travel restrictions will soon ease.

Kihara went on television on Sept. 11, saying the government will consider making Japan-bound travel more accessible by scrapping the cap on daily visitors and tourist visa requirements in the not-so-distant future.

Although no set date was given, many expect visa requirements to be lifted sometime in October.

“The Korea-Japan Parliamentarians’ Union agreed to re-introduce the no-visa entry system, which was halted due to the pandemic, as early as October,” said Choi Go-woon, an analyst at Korea Investment & Securities. “Covid-19 cases are decreasing in both Korea and Japan, and it is more than natural for entry regulations to ease.

“Travel demand is slowing down a little bit because the summer vacation season has passed, but if travel restrictions for Japan are lifted, airlines’ businesses will start to rapidly improve from the fourth quarter.”

Koreans are currently allowed to travel to Japan, but must obtain a tourist visa. The restriction has made the country less attractive as a destination, as Koreans used to be allowed a no-visa entry for a maximum 90-day stay before the pandemic.

Visitors have to enter as part of a package tour and can’t come individually, another reason that Japanese travel demand was slow to pick up.

Travel agencies are welcoming the easing of restrictions, as Japan has long been a popular destination for Koreans.

There were 5.6 million Koreans traveling to Japan in 2019, according to the Korea Tourism Organization. That figure plummeted 91.4 percent on year to 480,000 in 2020 due to the pandemic, and dropped another 96 percent on year to 18,983 last year.

The number of flights to and from Japan as of August is only 16.5 percent that of pre-pandemic levels, and the change is expected to benefit local airlines as more flights will be added to respond to a rise in demand for travel to Japan.

“Flights to Japan are much shorter than those to Southeast Asian countries, and thus will have more travel demand and allow travel related businesses to recover more quickly once restrictions are eased,” said Park Su-young, an analyst at Hanwha Investment & Securities.

BY LEE TAE-HEE [lee.taehee2@joongang.co.kr]