COVID-19 related financial aids for airlines South Korea 2020
The South Korean government provided financial support of approximately 300 billion South Korean won to small and mid-sized Korean airlines to mitigate the impact of the coronavirus (COVID-19) pandemic in early 2020. Furthermore, as of April 2020, the government announced aid packages to the two major Korean airlines, Korean Air and Asiana Airlines, worth 1.2 and 1.7 trillion won each.
Korean Airlines and the COVID-19 Pandemic
The spread of COVID-19 in South Korea and then across the globe in the first months of 2020 heavily impacted domestic airlines. As countries went into lockdown and imposed restrictions on not only the entry of foreigners but even transits in some cases, a flurry of flight cancellations, ticket refunds, and even the complete suspension of flights erupted throughout the world. Subsequently, domestic airlines reported year-on-year revenue drops of 84.4 percent in the 3rd week of February 2020. In March, both international arrivals and departures dropped by over 94 percent compared to the previous year. Air cargo traffic was less affected, only recording a five percent drop. Industry insiders predicted that the ongoing COVID-19 pandemic could dampen demand for global air travel for the rest of the year.
Airlines’ Financial Woes
The government decided to financially support these private companies after deliberation as the airlines’ financial woes were not entirely the result of the pandemic. Thus, there were concerns of public criticism for using taxpayers’ money to fund the airlines. Korea’s largest carrier, Korean Air, and others have promised to improve their financial status, cut dividends, and not lay off their employees as they receive public financial aid.
Korean Airlines and the COVID-19 Pandemic
The spread of COVID-19 in South Korea and then across the globe in the first months of 2020 heavily impacted domestic airlines. As countries went into lockdown and imposed restrictions on not only the entry of foreigners but even transits in some cases, a flurry of flight cancellations, ticket refunds, and even the complete suspension of flights erupted throughout the world. Subsequently, domestic airlines reported year-on-year revenue drops of 84.4 percent in the 3rd week of February 2020. In March, both international arrivals and departures dropped by over 94 percent compared to the previous year. Air cargo traffic was less affected, only recording a five percent drop. Industry insiders predicted that the ongoing COVID-19 pandemic could dampen demand for global air travel for the rest of the year.
Airlines’ Financial Woes
The government decided to financially support these private companies after deliberation as the airlines’ financial woes were not entirely the result of the pandemic. Thus, there were concerns of public criticism for using taxpayers’ money to fund the airlines. Korea’s largest carrier, Korean Air, and others have promised to improve their financial status, cut dividends, and not lay off their employees as they receive public financial aid.
