"From China to Hong Kong and Macao"... LCC Industry Sighs

Demand Recovery for Greater China Routes Likely Difficult for Now
Damage Increased Due to Suspension of Regional-China Flights
"May Need to Focus on Japan and Taiwan Routes"

On the 5th, the first day of mandatory registration for the 'Quarantine Information Pre-Entry System' (Q-CODE) for arrivals from China, Hong Kong, and Macau, a notice replaced with Chinese characters reading '?中??的旅客 (travelers from China)' was installed at the arrival hall of Terminal 1 at Incheon International Airport. Photo by Jinhyung Kang, Yeongjongdo aymsdream@

[Asia Economy Reporter Oh Gyumin] Following China, the mandatory COVID-19 polymerase chain reaction (PCR) testing for arrivals from Hong Kong and Macao has deepened the concerns of the low-cost carrier (LCC) industry. The anticipated resumption of flights has inevitably been delayed, leading to route substitutions to destinations such as Japan.

The Central Disease Control Headquarters (CDCH) will enforce mandatory pre-entry PCR testing and the use of the quarantine information pre-entry system (Q-Code) for arrivals from Hong Kong and Macao starting from the 7th. This measure follows previous policies applied to all arrivals from China, including mandatory PCR testing before and after entry and restrictions on short-term visas.

The LCC industry, which had hoped for the resumption of Hong Kong and Macao routes, expressed disappointment. An LCC industry official said, "Since these are the same Greater China regions, strengthening quarantine measures for arrivals was an expected step," adding, "We hoped for a recovery of Hong Kong and Macao routes in the future, but it seems difficult to resume operations for the time being."

LCCs operating routes between local regions and China, with Incheon Airport designated as the domestic stopover for flights from China, have already suffered a blow. Air Busan has completely suspended its once-weekly Busan-Qingdao regular route. T'way Air has temporarily halted its Daegu-Yanji route and postponed the increase of flights on the Incheon-Jinan route.

Additionally, these carriers had planned to launch and increase flights on China routes starting this month, expecting revenue growth due to their relatively high dependence on China routes. As of the second quarter of last year, T'way Air's revenue share from China routes ranked second at 4.6%, following domestic routes at 88.8%. Jeju Air recorded the highest revenue from China routes among its overseas routes in 2021.

The alternatives are Japan and Taiwan. This is an effort to replace the reduced demand for China routes. Recently, demand for Japan routes has been rapidly increasing, which is positive. After Japan allowed visa-free entry for Koreans, the number of flights and travelers in November last year surged to 2,279 flights and 366,629 travelers within a month. An industry official stated, "Since demand for Japan routes continues to rise, compensating for the decreased demand on China routes could be a viable option," adding, "Taiwan also maintains steady passenger demand."