South Korea’s flag carrier sent out a stark warning to its employees earlier today as the economic dangers posed by the coronavirus outbreak continue to mount. As one of the countries worst affected by coronavirus-related travel restrictions, South Korea’s airlines have found themselves in a particularly vulnerable position.
Today has shown just how much potential coronavirus has to damage the global economy. Stock markets around the world have suffered sharp falls this morning, as has the price of crude oil.
As the past couple of months have shown, the aviation industry has been particularly exposed to the negative effects of the coronavirus outbreak. Reports by Skift this morning reveal just how much trouble one Asian flag carrier could be in.
Korean Air in trouble
As one of the countries worst affected by the coronavirus outbreak, South Korea has seen a massive reduction in international air travel across its borders. The country’s largest airline and flag carrier, Korean Air, has borne the brunt of the flight cancellations, losing around 80 percent of its normal capacity. The airline reportedly released an internal memo to staff this morning which explained the potential effects the ongoing outbreak could have on the airline.
In the memo, Korean Air’s president, Woo Kee-hong, said, “if the situation continues for a longer period, we may reach the threshold where we cannot guarantee the company’s survival.”
The reduction in demand as a result of the coronavirus outbreak has been so severe that the airline has temporarily removed around 100 of its 145-aircraft fleet from active duty. Currently, South Korea’s total number of confirmed coronavirus cases has hit just under 7,500, making it one of the worst affected countries.
It’s not just Korean Air’s international flights which have taken a battering. On Monday 24 February, Korean Air announced it would be cancelling all flights to Daegu until 28 March. Although Daegu is South Korea’s fourth-largest city, it has the highest number of coronavirus cases in the country, meaning air travel to the city has been effectively stopped completely.
The effect on other airlines
Korean Air is by no means the only airline which has been severely affected by coronavirus outbreak. Asian airlines have been particularly badly hit by travel restrictions, but airlines all over the world have all felt the negative effects in some way or another.
Last week we witnessed the collapse of British regional airline Flybe after a lengthy struggle to secure funding which would have allowed the airline to stay afloat. While Flybe had been in trouble for a while, the final nail in the coffin appears to have been the reduced demand and flight cancellations brought about by the coronavirus outbreak. The airline failed to secure a £100 million loan from the UK government in order to continue operations.
Upon the cancellation of operations, Flybe said that its recent challenges were “compounded by the outbreak of coronavirus which in the last few days has resulted in a significant impact on demand.”