"Diversifying Non-Stop Sightseeing Flights, Promoting Travel Bubble"... Full Effort to Revive Aviation Industry

Recovery of Aviation Industry Demand Expected to Take Additional 2-4 Years
Extension of Acquisition Tax and Other Exemptions to Reduce Airlines' Burden
Diversifying Non-Stop Sightseeing Flights to Create New Demand

Korean Air passenger planes and others are parked at the Gimpo Airport apron in Gangseo-gu, Seoul. Photo by Kang Jin-hyeong aymsdream@

[Asia Economy Reporter Moon Jiwon] The government plans to expand financial support for airlines to assist the aviation industry, which has been continuously struggling since the spread of COVID-19, and to diversify non-landing sightseeing flights as well as promote initiatives such as the Travel Bubble (Travel Bubble·non-quarantine travel zones).

On the 3rd, the government announced the "Plan to Overcome the COVID-19 Crisis and Reboot the Aviation Industry" at the 31st Emergency Economic Central Countermeasures Headquarters meeting held at the Government Seoul Office.

Last year, as the aviation industry stagnated due to the spread of COVID-19, the government implemented more than ten support measures, but it is still expected to take another 2 to 4 years to recover demand to previous levels. The government prepared this plan to support the aviation industry, a core period industry, and to enhance industrial competitiveness.

Diversification of Non-Landing Sightseeing Flights... Promotion of Travel Bubble

First, to create new aviation demand, the government is reviewing plans to allow non-landing sightseeing flights, which currently only operate from Incheon Airport, to also operate from regional airports, and to provide incentives to operating airlines and travel agencies in cooperation with related organizations such as the Ministry of Culture, Sports and Tourism.

Currently, sightseeing flights operate in an "outbound" form, departing from Korean airports, flying over foreign airspace, and returning, but the government plans to introduce "inbound" sightseeing flights that depart from foreign airports and fly over Korean airspace.

In consultation with quarantine authorities, plans are also being considered to allow passengers to land at domestic airports, use duty-free shopping, and then return, or to permit entry under limited conditions in areas surrounding the airport.

To establish a foundation for the safe resumption of international flights, the Travel Bubble will also be promoted within this year. The Travel Bubble means mutual lifting of entry bans and easing of quarantine measures without restrictions on the purpose of visits, based on confirmation of negative COVID-19 test results.

However, since the Travel Bubble requires consultation with related agencies such as quarantine and diplomacy, the actual implementation will be decided later. Kim Sangdo, Director of Aviation Policy at the Ministry of Land, Infrastructure and Transport, said, "We are in practical discussions with target countries, but they are cautious about publicly disclosing the progress of the Travel Bubble, so it is difficult to specify details."

The Ministry of Land, Infrastructure and Transport also reported that the introduction of a "Travel Pass" app, which contains information such as PCR test results and vaccination records, is under review. Although issuing a Travel Pass does not immediately allow quarantine-free travel to specific countries, it can alleviate inconveniences caused by varying quarantine measures by country.

Passengers at Gimpo Airport Domestic Terminal in Gangseo-gu, Seoul are wearing masks and moving towards the boarding gate. Photo by Jinhyung Kang aymsdream@

Extension of Acquisition and Property Tax Reductions... Promotion of Aviation Industry Development Association Establishment

The government is also reviewing whether to extend or resume reductions in acquisition and property taxes on aircraft. Currently, under Article 65 of the Local Tax Special Cases Act, acquisition tax on aircraft has been reduced by 60% from 2017 through this year, and property tax is reduced by 50% only for low-cost carriers.

As the prolonged COVID-19 pandemic continues to cause management crises for airlines, and many major competing countries have no related tax burdens, the government plans to actively consider additional reductions through research projects.

To strengthen the competitiveness of the Maintenance, Repair, and Overhaul (MRO) industry, institutional support measures such as research and development (R&D) support and tax reductions will also be reviewed.

Measures to fundamentally enhance industrial competitiveness so that the aviation industry can maintain self-sustainability even in repeated crisis situations such as infectious diseases will also be pursued.

The government plans to revise the Aviation Business Act, which specifies the basis for establishing the Aviation Industry Development Association, and the Airport Corporation Act, which includes support for the establishment of the association by the Airport Corporation, and to establish the association in the second half of this year.

Kim Sangdo, Director of Aviation Policy at the Ministry of Land, Infrastructure and Transport, explained, "The funding for establishing the association aims for a total of 1 trillion won, including 300 billion won in public funds and 700 billion won from airlines. Once the research results come out around June, we plan to consult with airlines and establish the association within the year."

Additionally, to prevent safety issues with long-term grounded aircraft as aviation demand recovers, the aviation safety supervision system will be strengthened. The Ministry of Land, Infrastructure and Transport’s specialized inspectors plan to provide pre-consulting on pilots, maintenance, and cabin crew during the preparation process for resuming operations, in addition to airline inspections.

Minister of Land, Infrastructure and Transport Byun Changheum said, "It is true that it will take time until the COVID-19 situation is completely resolved through vaccine distribution, etc. I hope that through this additional support plan, our aviation industry can maintain employment and enhance corporate competitiveness until the demand recovery point."