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Airlines, travel agencies to receive gov't aid
Tourists wait for airport limousine buses, Feb. 11, in front of the Incheon International Airport Terminal 1, which has become quieter than usual following the outbreak of the new coronavirus. The government said Monday that it will expand its financial aid for airlines and tourism companies hit by the contagious disease. / Yonhap
By Jun Ji-hye
By Jun Ji-hye
The government will offer up to 300 billion won ($254 million) in emergency loans through the state-run Korea Development Bank to low-cost carriers (LCCs) that have suffered a heavy hit to their earnings because of the new coronavirus, officials said Monday.
The government will also allow delayed payment of fees for the use of airport facilities for up to three months, and will reduce landing charges by 10 percent for two months from June if demand for flights has not recovered within the later part of the first half of the year.
The measures to support local air carriers, drawn up by the Ministry of Land, Infrastructure and Transport, were finalized at a meeting with economy-related ministers presided over by Finance Minister Hong Nam-ki.
“The airline industry is one of the sectors that takes the hardest hit when an infectious disease breaks out,” Transport Minister Kim Hyun-mee said. “Emergency loans will be provided to help airlines overcome insufficient liquidity and be recovered at the earliest possible date.”
The airline industry has already suffered operating losses for the third consecutive quarter due to nationwide boycotts of trips to Japan, which was a reaction to Japan's restrictions on exports of key industrial materials to Korea, and the grounding of the Boeing 737 Max, according to the ministry.
Following the 2019-nCoV (COVID-19) virus outbreak, the number of fights on routes from Korea to China has decreased by about 77 percent as of the third week of February since early January, while demand for flights to Southeast Asian countries is also expected to shrink amid growing fears of infection in other countries.
The ministry said the airlines have paid customers 300 billion won in refunds for the cancellation of overseas trips in only three weeks.
It vowed to increase administrative support so air carriers can launch alternative routes to offset the lower demand for those to China.
The ministry will distribute new traffic rights for services connecting Seoul with Paris, Hungary and Portugal within the month, and support the expansion of new routes to Qui Nhon in Vietnam and Pakse in Laos.
“We will streamline administrative procedures so airlines can promptly change their business plans and launch new routes,” a transport ministry official said.
Meanwhile, the Ministry of Culture, Sports and Tourism will utilize the Tourism Promotion and Development Fund to extend 50 billion won in special loans to small tourism companies, which have also suffered from the viral outbreak.
The measure comes as some small enterprises are expected to file for bankruptcy amid the increasing cancellation of overseas trips.
The collateral-free loans will be offered with an annual interest rate of 1 percent.
“We hope the tourism industry will be able to be recover from financial difficulties at the earliest possible date through the government's financial aid,” a tourism ministry official said.