Depressed 40th Aviation Day "Endless COVID-19... Need Innovation to Prepare for Prolonged Battle"

First 'Online Commemoration Ceremony' for COVID-19

[Image source=Yonhap News]

[Asia Economy Reporter Yoo Je-hoon] The 40th Aviation Day commemorative ceremony will be held online for the first time in history. Amid the unprecedented industry-wide slump caused by the COVID-19 pandemic, insiders both inside and outside the industry agree that, given the prolonged nature of the crisis, it is necessary to prepare for the 'post-COVID' era.

According to the Korea Aviation Association on the 30th, the 40th Aviation Day commemorative ceremony will be broadcast live on YouTube. Since 1980, this is the first time the Aviation Day ceremony is held online. The Korean Society of Aviation Management's autumn academic conference, held the same afternoon, will also be conducted via YouTube and Zoom as a measure to prevent the spread of COVID-19.

With international flights reduced by more than 90% due to COVID-19, the mood in the industry celebrating its 'birthday' is deeply depressed. For example, Korean Air's consolidated sales in the first half of the year were 4.1557 trillion KRW, and operating profit was 27.3 billion KRW, down 33% and 83% respectively from the previous year. Asiana Airlines also saw sales drop 38% to 2.1801 trillion KRW, with operating losses more than doubling to 268.5 billion KRW. The situation is even more severe for low-cost carriers (LCCs) with no escape routes such as cargo business. Jeju Air's half-year sales fell 63% to 265.2 billion KRW compared to the previous year, and operating profit turned from a 111.1 billion KRW surplus to a 90.7 billion KRW deficit, a dramatic turnaround.

As a result, most airlines are currently implementing paid and unpaid leave. Recently, with the expiration of the government's paid leave employment retention subsidy, more airlines are switching to unpaid leave. An industry insider lamented, "If we reapply for the employment retention subsidy next year, we can switch back to paid leave, but once the six-month period passes, there is no way."

The industry expects the extreme demand contraction caused by COVID-19 to continue for at least one to two years. A senior official from a national airline said, "Unlike overseas markets, the domestic aviation market is weak in domestic routes, so national airlines are experiencing a greater shock," adding, "Even if a vaccine is developed, distribution and vaccination will take time, so it will take several more years to recover demand to pre-pandemic levels."

Experts advise that since the prolonged COVID-19 crisis is evident, the government and industry need to prepare not only for short-term liquidity supply but also for the 'post-COVID' era. The entire industry must work on demand recovery and discovering new growth engines to survive until the COVID-19 situation is resolved.

Professor Yoon Moon-gil of Korea Aerospace University, who delivered the keynote speech at the Aviation Management Society's autumn academic conference, identified mid- to long-term tasks such as ▲stimulating aviation demand ▲securing market competitiveness ▲innovation including business diversification ▲and inducing market-based restructuring in his presentation titled "The Crisis and Response Tasks of the Aviation Industry Due to COVID-19."

Professor Yoon said, "Previously, even if demand shrank due to infectious diseases, recovery was rapid after the crisis was resolved, but COVID-19 has nullified this pattern," adding, "It is necessary for the government and the entire industry to consider long-term innovation directions, such as building a business portfolio that can withstand sudden adverse events like aircraft maintenance and aircraft finance, and contemplating phased demand recovery plans."