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Will cargo traffic save embattled air carriers?

Airlines open more international routes, focused on recovering cargo business

(Korean Air)
(Korean Air)

South Korean air carriers are opening more international routes from July -- suspended over the COVID-19 pandemic since March -- by focusing on recovering cargo volumes instead of depending on bleak passenger demand, according to industry sources Monday.

According to Korean Air, it plans to resume Incheon-Dallas and Incheon-Vienna routes from July. 

The company said it will also increase the number of routes to destinations in the US and Europe, including to Los Angeles, San Francisco, Atlanta, Washington, Paris and London.

For Southeast Asian destinations, the air carrier said it is reviewing to expand the number of flights to Hanoi and Ho Chi Minh City. 

These routes account for less than 30 percent of its total number of international routes of 110 it had operated prior to COVID-19 outbreak. 

Another full-service carrier Asiana Airlines also said it will fly Incheon-Osaka routes three times a week from July 1. It is reviewing to operate the Incheon-Osaka route on a daily basis from late July. 

The company said it will resume its Incheon-Paris and Incheon-Istanbul routes that run once a week, as well as the Incheon-London route operated twice a week, from July. 

For international routes that began operations earlier this month, such as to Hong Kong, Ho Chi Minh City, Hanoi, Bangkok, San Francisco, Los Angeles and Frankfurt, the air carrier plans to operate them more frequently -- at least one or two more times a week. 

But market insiders said that opening of more international routes does not equal recovery of passenger demand, but is rather a strategy to focus on pulling up cargo volume. 

“Since the COVID-19 pandemic is still ongoing, and some countries are still banning the entry of foreigners, it will take longer than expected to see the passenger numbers to rebound to last year’s level,” an industry insider told The Korea Herald. 

He added that international routes that both Korean Air and Asiana Airlines plan to expand are routes with higher cargo demand. 

To more effectively recover cargo volume, Korean Air said it has adopted a cargo seat bag for the first time as an air carrier here, so the cargo can be loaded to a passenger seat, in addition to the compartment area. 

Industry data showed that Korean Air’s cargo volume grew 13.5 percent to 106,424 tons last month compared to a year ago. Asiana Airlines also recorded 4.3 percent increased cargo volume at 53,444 tons. 

Market experts said that the numbers were impacted by the export of medical equipment and hygiene products related to COVID-19 and import of fresh food such as cherries from the US. 

“With increased cargo volumes, the full-service carriers spent less than 100 billion won ($82 million) last month, compared to 150 to 200 billion won they had to pay in the previous month. They can possibly expect their second quarter results turn to black,” said Ryu Je-hyun, a researcher at Mirae Asset Daewoo. 

But low-cost carriers, which heavily depend on passenger demand on smaller planes instead of cargo business, are faced with a bleak outlook. 

Jin Air, the only LCC with a midsized B777-200ER, has been seeking to reduce its losses over COVID-19 by focusing on pulling up cargo demand.

An industry insider said that since LCCs mostly run smaller planes for short distance flights to neighboring countries like China and Japan that still block entry of foreigners, it will be harder for them to see sales recovery in the near future. 

According to the Foreign Ministry, a total of 182 countries have restricted entry of foreigners or strengthened immigration control as of June 13. 

By Kim Da-sol (ddd@heraldcorp.com)
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