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Korean budget carrier Eastar furloughs staff as Japan traffic drops

  • September 22, 2019
  • , Nikkei Asian Review , 4:22 a.m.
  • English Press

SEOUL — The repercussions from Japan and South Korea’s frayed relations continue to spread, with a Korean discount carrier that operates routes between the countries deciding to furlough workers amid a sharp decline in passengers.

 

Eastar Jet, which flies to seven Japanese cities including Tokyo, Osaka and Fukuoka, is soliciting volunteers among its flight attendants to take unpaid leave from October through December. The move comes as the carrier suspends its Busan-Sapporo and Busan-Osaka routes.

 

CEO Choi Jong-gu recently announced management’s shift to a crisis footing on a website for company employees. Although the scope of the furlough is not set, he said that there were no signs that the challenging business conditions would turn around soon. The carrier is particularly reliant on its Japan routes.

 

Japan’s move in July to tighten export controls on South Korea sparked a consumer boycott there as well as calls to avoid travel to Japan. South Korean visitors to Japan in August dropped 48% from a year earlier to 308,700, the lowest monthly tally in about three years, according to the Japan National Tourism Organization.

 

South Korean carriers’ Japan service averaged passenger loads of 69% in August and 61% in the first week of September — compared with loads exceeding 80% in the summer 2018, Korea Civil Aviation Association data shows.

 

South Korea’s eight carriers posted losses for the April-June quarter. In addition to lackluster freight demand, a weak won increased fuel costs.

 

The break-even passenger loads for full-service carriers such as Korean Air Lines is estimated at 70%, and about 60% for budget carriers. Considering the drop in traffic to Japan, some routes between the two countries are likely operating at a loss.

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