Despite the burden of fuel surcharges, overseas travel demand has not waned, and the aviation industry's performance is expected to rebound in the third quarter of this year. With the decline in the won-dollar exchange rate added on top, expectations for improved profitability among airlines are growing, centered on air cargo and short-haul travel demand.
According to the Ministry of Land, Infrastructure and Transport's Aviation Information Portal on the 12th, international passenger traffic from January to September this year reached 76,722,932, a 9.9% increase compared to the same period last year (69,830,166). This is also 12.1% higher than the same period in 2019, before the COVID-19 pandemic (68,469,377), marking an all-time high.
Demand concentrated on nearby routes such as Japan and China. Passenger traffic on Japanese routes increased by 20.5% to 23,957,423, accounting for 31.2% of total international traffic. Chinese routes saw 15,419,550 passengers, a 22.9% increase, while Taiwanese routes rose by 20.5% to 5,060,100. The increase in passenger traffic on Japanese and Chinese routes (6,949,236) exceeded the total increase (6,892,766). In contrast, Vietnamese routes decreased by 5.4%, while Thai and Philippine routes fell by 14% each.
The aviation industry, which had sluggish second-quarter performance due to high oil prices and a high exchange rate, is in a celebratory mood. Analysis suggests that despite fuel surcharge hikes pushing fares up more than 10% year-on-year, passenger demand has exceeded expectations.
Korean Air is benefiting from strong passenger trends, which are further boosting its air cargo performance. This is thanks to increased demand for high-tech cargo driven by the semiconductor boom and expanded global data center investments. International cargo transport volume from January to September this year reached 3,368,890 tons, a 6.8% increase compared to the same period last year. Korean Air transported 138,351 tons last month, handling 56% of domestic airlines' international cargo. LS Securities estimated Korean Air's third-quarter standalone operating profit at 538.4 billion won, a 43.1% increase from the same period last year. Cargo route revenue is expected to rise by 44.5% to 1.541 trillion won.
The low-cost carrier (LCC) industry also expects performance improvements, centered on top-tier companies. Jeju Air posted record-high standalone second-quarter revenue of 441.7 billion won but still recorded an operating loss of 52.4 billion won. The industry is in a mood to expect that profitability will recover rapidly and turn profitable in the third quarter, driven by factors such as increased travel demand to Japan. Jeju Air's international passenger traffic last month was 735,603, the highest among LCCs, with a load factor of 89.9%, the highest among domestic airlines. Additionally, Jeju Air reached 10 million passengers from the beginning of this year through last month. This is the fastest record among domestic LCCs.
The falling exchange rate is also expected to contribute to performance improvements. According to the Bank of Korea, the quarterly average won-dollar exchange rate dropped by 83 won, from 1,501.6 won in the second quarter to 1,418.6 won in the third quarter.
An industry official said, "With travel demand solid, centered on Japanese and Chinese routes, and the exchange rate falling, cost burdens have been significantly reduced." The official added, "However, as oil prices may rise again depending on Middle East geopolitical conditions, we will focus on cost management in the fourth quarter as well."
in INDUSTRY
