Red alert: South Korean regionals struggle under financial pressure

02 April 2019
Flagship asset Incheon International is one of the few South Korean airports to make a profit. Source: Getty Images

While many airports in the country make a loss, there are still plans to build new facilities

According to the latest official figures, 10 out of 15 airports in South Korea are in the red: Gunsan, Gwangjiu, Pohang, Sacheon, Ulsan, Wonju, and Yeosu regional airports, as well as Cheongu, Muan, and Yangyang international airports.

The only profitable airports are main gateway Incheon International, as well as Daegu, Seoul Gimpo, Busan Gimhae, and Jeju international airports.

One of the main reasons behind the struggles is the growing use of high-speed rail (HSR), which continues to draw domestic passenger traffic away from South Korean regional airports.

HSR services began in South Korea in 2004. Ministry of Land, Infrastructure and Transport (MLIT) official Kim Jung Rak said that more people are expected to prefer HSR over air travel as the rail network expands. By 2020 an estimated 80% of the 52 million people in South Korea will have access to HSR. “As the network expands more people will resort to using HSR as it is more convenient and fares are lower than that of airlines,” Kim noted.

White elephants

Unnecessary construction of certain airports, as well as routes with poor load factors, have resulted in financial strain on the government and airlines.

Some airports were built after government officials and politicians over-estimated demand. A typical case was Uljin Airport in North Gyeongsang Province.

In the 1990s, some politicians urged construction of an airport to boost the local economy. Construction began in 1999 at a cost of USD142 million but the project was suspended in 2005 as poor demand meant that no airline was interested in operating flights there.

An investigation carried out by an independent board of auditors revealed that construction was politically initiated to gain votes. The airport was then converted into a flying school named Uljn Flight Training Centre in 2010.

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