Korean Air Business Affected After ‘Nut Rage’ Incident
kpride, Dec. 26, 2014, 10:50 a.m.
Korean Air saw its share of international passenger traffic fall to below 30 percent for the first time ever just as business is being damaged further by the "nut rage" incident that made headlines worldwide.
According to the Ministry of Land, Infrastructure and Transport, Korean Air's share of international passenger traffic fell from 35.6 percent in 2012 to 29.3 percent this year. The carrier's share is expected to fall even further if December's performance is included.
As the number of Chinese visitors to Korea continues to soar, international passenger traffic also surged from 47.7 million in 2012 to 51 million in 2013. The growth has continued this year with international traffic totaling 51.9 million from January to November of this year.
But Korean Air's share declined. The number of passengers on its international flights dropped from 17 million in 2012 to 16.6 million in 2013, down two percent, and to 15.2 million so far this year, down 0.5 percent compared to the same period of last year. That brings the flag carrier's share of international passenger traffic below 30 percent for the first time ever.
The reason is the strong performance of low-cost carriers and foreign airlines, which has affected both Korean Air and rival flag carrier Asiana, but Korean Air has seen an especially marked drop. Low-cost carriers' share of international passenger traffic rose from just 7.5 percent in 2012 to 11.4 percent from January to November of this year, thanks to their efforts to boost flights to China, Japan and Southeast Asia.
Foreign airlines have also seen their share of international passenger traffic rise from 33.3 percent in 2012 to 37.4 percent in the first 11 months of this year. Analysts say Korean Air's poor performance is particularly due to more flights offered by Chinese carriers and a decline in the number of Japanese tourists visiting Korea due to the weak yen.
China Southern Airlines, China Eastern Airlines and Air China saw their combined shares of international traffic soar from 2.89 million in 2012 to 3.18 million in 2013, up 9.7 percent, and to 3.57 million so far this year, up 12.3 percent. The phenomenal growth stems largely from Chinese passengers shifting to their own flag carriers.
Japan has boosted the number of international flights in and out of Haneda Airport in Tokyo, which has also contributed to a decline in Japanese passengers transiting through Incheon International Airport. Korean Air, which hiked the number of flights to Japan since 2000, has been cutting down flights recently due to a drop in the number of passengers.
Huh Hee-young at Korea Aerospace University said, "Chinese carriers offer cheaper tickets with four times as many planes as Korean carriers for international flights. The 'nut rage' incident is only going to deepen Korean Air's woes."