UAE airlines seek more flights leaving Korean carriers to fear turbulent future

Industry

Published: 12 Oct. 2023, 18:26 Updated: 13 Oct. 2023, 19:01

UAE airlines seek more flights leaving Korean carriers to fear turbulent future

Emirates airline [JOONGANG PHOTO]

The UAE's airlines are pushing the Korean government to increase flight frequency between the two countries, making a request that the government has repeatedly declined previously for fear of affecting local carriers.

The request aimed at doubling or quadrupling the frequency will likely be made at aviation talks between Korea's Ministry of Land, Infrastructure and Transport and the UAE's Civil Aviation Authority, from Oct. 12 to 13 in Seoul.

The UAE demands that the government double or triple the current weekly slot of 15.

At this time, Korean carriers have become hypersensitive as the government is likely to accept the UAE’s demand as a gesture of goodwill in return for the UAE’s $30 billion investment promise.

UAE carriers’ longing to strengthen their foothold in the Korean market has come back stronger than before.

In the previous meeting, in 2019, the Korean government turned down the proposal to double the number of Incheon-Dubai and Incheon-Abu Dhabi flights.

Etihad Airways [JOONGANG PHOTO]

UAE carriers currently occupy nearly 70 percent of passengers on the routes between the two countries. The Korean aviation industry raised concerns that UAE’s request would incur a significant loss in their revenue and profit.

Dubai-based Emirates operates flights connecting Incheon and Dubai once per day and Etihad Airways flies once per day between Incheon and Abu Dhabi.

Emirates operates the world’s largest double-decker aircraft, A380 with 517 passenger seats installed and Etihad Airways deploys B787, a midsize plane capable of carrying 327 passengers.

Korean Air, the only Korean carrier flying to the UAE, operates flights between Incheon and Dubai once per day, with a relatively small-sized fleet A330 which can carry up to 218 passengers. The Korean carrier decided not to use the remaining eight slots due to a lack of demand.

The discrepancy in carriers’ seat capacity gives the UAE airlines favorable positions in the market.

A total of 150,000 passengers flew on this route in 2019 and the UAE carriers flew nearly 70 percent of them. What raises an alarm bell is that Korean passengers heading to their final destinations in Europe accounted for more than 60 percent of all passengers.

According to the industry, the UAE carriers offer Europe-bound tickets with cheaper fares which is around 30 percent less than the price of Korean airliners. Low-priced tickets have become irresistible, leading Koreans to choose to have layovers in the UAE airports instead of taking relatively expensive direct flights to Europe.

If the UAE’s wish comes true, Korean carriers’ flights to the UAE and Europe might be slammed altogether.

“Even if Korean Air increases flights between Korea and European destinations, with the UAE airliners continuing to dump tickets in low prices, it will be inevitable to face a deficit,” a source from Korean Air said.

International carriers other than Middle Eastern carriers have grown concerned as Arabian carriers have been taking away most of the passengers who used to fly with them.

Australian carrier Qantas Airways cut most of its European routes after falling behind Middle Eastern carriers. Air France also no longer operates flights on Middle Eastern and Southeast Asian routes.

Major American carriers called for countermeasures to stand against the expansion of Middle Eastern carriers, claiming that the $50 billion scale of governmental subsidies that went into the Emirati and Qatari airliners caused unfair market competition.

Korean Air full-service carriers [JOONGANG PHOTO]

Noting the global situation, the ministry did not accept the UAE’s demand in aviation meetings in 2018 and 2019 as it opted to protect Korean airliners.

Back then, some officials in the foreign policy circle advocated the UAE flight expansion due to the export of nuclear power plants, but the transport ministry pushed back over fears of harming the local aviation industry.

“Unlike other industries, once air-carrier markets collapse, it is extremely difficult to make a recovery,” an aviation source said.

“It seems that the government regards the aviation market and industry as a transactional sector which can be offered as a benefit to win other industrial bids overseas.”

The industry also worries that acceptance of the UAE’s request could prompt other Middle Eastern carriers to ask for similar treatment.

“An additional increase in flight frequencies will only negatively affect the Korean airline industry and it will eventually bring more economic burden to customers when Middle Eastern carriers corner the market after Korean carriers cut direct flights to Europe,” another source from Asiana Airlines said.

The ministry tipped off Korean carriers in a belated manner. The ministry only notified them that the meeting would take place and kept the meeting dates behind the doors. Korean air carriers had to rely on the UAE-based carriers to obtain information about this year’s meeting.

In the past, the ministry and the industry used to share ideas and devise strategies altogether a month before the meeting.

Industry experts have been expressing concerns.

“In a situation where Korean carriers have been struggling due to the cheap pricing strategies of other carriers, accepting the UAE’s demand would bring significant damage to our industry, it will especially hit direct European routes hard,” Kim Yeon-myung, a professor of Aerospace Industrial & Systems Engineering at Hanseo University, said.

Incheon International Airport [YONHAP]

“If we lose our transfer passengers to the Middle Eastern carriers, it will bring a setback in positioning Incheon International Airport as a global hub for air transportation,” Kim added.

“If inevitable, [the government] should minimize the increase in flight frequency and attach conditions to protect Korean carriers.”

“The Korean airliners should put up with the competition up to a certain point as long as it offers the increased number of available flights to customers with low prices,” said an anonymous source in the aviation industry.

“A policy inducing losses in the aviation sector for the sake of securing the interests for other industries is problematic,” the source added.

“[The ministry] plans to address and explain the meeting’s agenda from the perspective of the aviation industry,” Jeong Yong-sik, a head of the Civil Aviation Office at the transport ministry said.

It is estimated that 80,000 jobs in the airline industry in the European Union disappeared between 2010 and 2015. Industry data shows that some 1,500 to 1,900 jobs are lost for every flight route that shuts down.

BY KANG KAP-SAENG, SEO JI-EUN, LEE SOO-JUNG [lee.soojung1@joongang.co.kr]