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Korean aviation industry at risk of chain bankruptcy

Korean tourism

The ripple from the devastation in the Korean air travel industry due to a global pandemic has developed into a shockwave, putting at least 250,000 jobs on the line and pushing a wide range of service businesses to the brink of bankruptcy.

SEE ALSO : Korea reports low number of air passengers in March

The catering center at the Incheon International Airport servicing Korean Air Lines, for one, packages just 3,000 in-flight meals a day, compared with 72,000 meals a year ago. Out of 1,300 usual workforce, 350 now report to work. At least 500 to 600 have been given the redundancy notice.

Korean Air said it had never seen the number of meals served at the catering center fall below 30,000 per day. But the daily service slipped below 20,000 on 2nd March and fell further to less than 10,000 in just a week. The catering center in Busan serving for the Gimhae International Airport is providing just 50 meals a day after offering 6,000 meals on average a year ago, according to an official from Korean Air.

The grim picture in the in-flight meal business is just the tip of the iceberg, industry experts said. They lamented that more than 250,000 jobs would be lost when the local airline industry collapses.

Last month, the International Air Transport Association (IATA) estimated that the meltdown of Korean aviation ecosystem would eliminate 160,000 jobs and cut the country’s gross domestic product (GDP) by 11 trillion won (US$8.92 billion).

Airlines big and small are hit hardest by the virus outbreak, with more than 80 percent of their flight services suspended due to the plunging number of air passengers and travel restrictions around the world. Eastar Jet, a local budget carrier that will go under its bigger rival Jeju Air, said it would let go of about 750 workers to downsize the workforce from the current 1,683 to around 930. It would be the first massive layoff caused by the COVID-19 pandemic.

SEE ALSO : Neiman Marcus files for bankruptcy

The aviation industry projected local air carriers would lose a combined 6.45 trillion won in sales from February to June. If the current slump lasts more than a couple of months, airlines and related businesses could experience a chain bankruptcy, industry experts concerned.

(Source: Pulse News)

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