Optimism runs low for battered travel sector

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Optimism runs low for battered travel sector

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A passenger-assisting robot looks for travelers in front of a notice board inside the mostly-empty Incheon International Airport Terminal 2 on Tuesday. [YONHAP]

Following a year of deteriorating relations between Korea and Japan, the most recent diplomatic spat has made for an increasingly bleak outlook for the local travel industry.

Last week’s moves by the two countries’ governments to effectively block travel to one another over the coronavirus outbreak came as the sector was already reeling from plummeting travel and tourism amid the growing epidemic.

Korean Air Lines, the leading domestic airline, has halted 16 routes to 11 Japanese cities through March 28, leaving only one route between Incheon and Narita still operating.

The second-largest carrier, Asiana Airlines, won’t be operating any flights to Japan until March 31 - the first time the carrier has completely closed down routes to Japan in its 30 years in business.

Budget carriers are doing the same. Jeju Air has grounded its flights to Japan, except for routes to Narita and Osaka. Jin Air, T’way Air, Air Busan and Air Seoul will also close down all routes to Japan starting Monday.

Among a total of 57 domestic airlines, only three now send planes to the neighboring country.

The financial blow is even more substantial for low-cost carriers that heavily depend on short-distance routes overseas. After the spread of the new coronavirus, most flights to China and Southeast Asia were closed.

For its part, the Korean government has attempted to mitigate the damage to the industry.

In mid-February, the government announced cuts to airport usage fees and loan benefits from private banks in support of low-cost carriers. Six low-cost carriers, however, released a joint statement on Feb. 28, asking for government funds and arguing that it’s impossible for them to seek loans from private banks given their typically high debt ratios.

According to the Korean Civil Aviation Association, the number of inbound and outbound international flight passengers in Korea during the last week of February was 652,626, down a whopping 65.8 percent on year. The on-year decline was even larger for flights to China (85.2 percent), followed by Japan (70.6 percent) and Southeast Asia (62.1 percent). The association expects that if this trend continues into June, domestic carriers will lose more than 5 trillion won ($4.2 billion) in revenue this year.

The outlook is even graver for travel agencies. Japan’s share of Korea’s outbound travel demand is substantial. From 2001 to 2018, Japan was Korea’s No. 1 overseas travel destination, although demand retreated last year due to an unofficial boycott on Japanese goods and travel as relations between the two countries soured.

But up until a couple months ago, travel agencies hadn’t lost hope that demand would eventually pick back up, as the boycott movement appeared to be softening by the year’s end. Despite the negative public sentiment, 5.6 million Koreans visited Japan in 2019.

Twelve outbound travel agencies saw a combined loss of 500 billion won after the coronavirus outbreak, according to an estimate from the Korea Association of Travel Agencies.

“We were recently seeing an increase in reservations for travel and business trips ahead of the 2020 Tokyo Olympics,” a travel agency source said. “After the travel restrictions between the two countries, phone inquiries for reservations to Japan immediately stopped. The situation doesn’t look like it will recover easily, even if the new coronavirus [outbreak] is settled.”

It’s not only outbound tourists the industry is worried about. Despite the boycotts, around 3.3 million Japanese people flew to Korea last year. This was the first time in six years that the figure passed 3 million. Japanese tourists account for 20 percent of Korea’s entire tourism industry.

By Monday, the number of daily passengers using Incheon International Airport had fallen to 21,241 - the lowest figure since it opened in 2001. The previous all-time low occurred in May 2003 amid the severe acute respiratory syndrome, or SARS, breakout.

BY KWAK JAE-MIN [song.kyoungson@joongang.co.kr]

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