Airlines, retailers struggling to cope with coronavirus

A quarantine official checks passengers arriving at Incheon International Airport from China for signs of fever and other symptoms amid growing concerns over the spread of the Wuhan coronavirus, Tuesday. / Yonhap

By Jun Ji-hye

Airlines, travel agencies and duty-free stores are expected to suffer a heavy hit to their earnings following the outbreak of the Wuhan coronavirus as an increasing number of people here are canceling trips to China, industry officials and analysts said Tuesday.

Inbound travelers from China will also likely decrease sharply as the government there banned its citizens from booking overseas tours and purchasing overseas flights and hotel packages, starting Monday.

Securities companies said the new coronavirus, which causes pneumonia-like symptoms, is expected to hit the industries harder than the outbreak of SARS in 2003.

On Friday, Korean Air suspended its flights to the Chinese city of Wuhan, where the virus originated, until the end of the month.

The nation's top flag carrier also decided not to charge cancellation fees for tickets for all routes to China issued before Friday. The decision will cover flights departing up to Feb. 29.

“We will make a decision on whether to resume flights to Wuhan in February after watching the Chinese government's actions,” a Korean Air official said.

Asiana Airlines, the nation's No. 2 carrier, is also not charging cancellation or destination change fees for flights from Korea to China issued before Friday.

Low-cost carriers are also joining the move. T'way Air was originally planning to launch flights to Wuhan, Jan. 21, but put this off amid mounting fears over the new coronavirus.

Air Seoul announced the suspension of its Incheon-Zhangjiajie and Incheon-Linyi routes, starting Monday, as the virus is spreading quickly and widely.

“The new coronavirus is causing a setback for air carriers' plans to expand flight routes from Korea to China amid lower demand for travel to Japan,” an official from one of the domestic carriers said.

NH Investment & Securities analyst Jeong Yeon-seong said air carriers who rely comparatively heavily on routes to China would not able to avoid adverse effects.

“As of the third quarter of last year, 19 percent of Asiana Airlines' sales came from its services to China, while Jeju Air and Korean Air generated 15 percent and 13 percent of their sales from operations between Korea and China,” Jeong said.

Travel agencies are also struggling to cope with the situation.

Modetour announced the cancellation of its package tours to China, refunding deposits paid by customers.

The number of people who have canceled tours to China has already reached more than 4,000, according to the company.

“Our refund policy does not regard concerns over contagious disease as a reason for a refund, but we decided to issue one this time as we put the safety of our customers first,” a Modetour official said.

HanaTour has also asked its stores not to charge cancellation fees for package tours to China.

Hana Financial Investment analyst Park Jong-dae said, “As the number of inbound travelers from China is expected to decrease, uncertainties are growing for Hotel Shilla, Shinsegae, AmorePacific and LG Household & Health Care, which rely heavily on their sales from duty-free businesses.”