Cancellation after cancellation... Domestic air passenger growth sharply declines

Nationwide Surge in Confirmed Cases
Passenger Growth Rate Hits Double Digits for the First Time This Year

[Asia Economy Reporter Dongwoo Lee] The surge in domestic air passenger traffic has sharply declined due to the impact of the fourth wave of COVID-19.

The aviation industry had anticipated a peak season during the summer vacation period, but with the recent nationwide spike in confirmed cases and the elevation of social distancing levels in non-metropolitan areas, the passenger growth rate has fallen to the 10% range for the first time this year.

According to the Ministry of Land, Infrastructure and Transport's Aviation Information Portal System on the 2nd, the number of passengers using domestic airlines last month (based on departures) was 3,083,004, marking only a 17.2% increase compared to the same period last year. This is the lowest growth rate seen this year.

Despite the period corresponding to the semi-peak to peak season, the slowdown in passenger growth is attributed to the fourth wave of COVID-19.

In May, when the spread of COVID-19 was not severe, the number of passengers reached 3,272,398, but last month, when the fourth wave intensified, it decreased by 5.7% (189,385 passengers). This contrasts with the same period last year, when air passenger numbers increased by 31.6% (632,798 passengers).

Passenger numbers using Jeju Airport, located in Jeju Island, a representative domestic tourist destination, are also declining. Last month, the number of domestic passengers using Jeju Airport was 1,121,442, marking a decrease for two consecutive months compared to June (1,190,314) and May (1,211,061).

With domestic flight booking rates plummeting, domestic low-cost carriers (LCCs) are uneasy. In fact, LCCs recorded a booking rate in the 50% range for the Gimpo-Jeju route during the peak season (July 26 to August 6) as of the end of last month, about 30% lower than last year's boarding rate in the 80% range.

In response, LCCs have recently engaged in ultra-low-price fare competition by selling one-way afternoon tickets on the Gimpo-Jeju route at prices in the 10,000 KRW range (excluding fuel surcharges and other fees). They aim to increase load factors even if it means reducing margins.

An aviation industry official said, "Due to the prolonged COVID-19 pandemic, this summer's peak season is showing results below expectations. While low fares are securing immediate cash flow, it remains difficult to improve financial structures."