t’way ends Japan routes

July 26th 2019

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Secondary services suspended amidst Korea-Japan tensions, tourism downturn Read More »

Korean LCC t’way is suspending some secondary routes between Korea and Japan. Public tension between the two countries has flared up again, this time on July 1 when Japan imposed restrictions on exporting high-tech materials to Korea. The trade spat has spilled over to everyday life, with consumers boycotting Japan. There are reports of Korean gas stations refusing to serve Japanese cars.

The suspended flights include Muan-Oita (3x weekly), Busan-Oita (3x weekly), Daegu-Oita (up to 4x weekly), Busan-Saga (4x weekly) and Owari-Osaka Kansai (3x weekly), according to Aviation Wire. They cover Osaka and Kyushu, major destinations for Korean tourists.

There are a number of other market dynamics that could explain the suspension. The thin routes could have been marginal to begin with, observers suggest. Many services involving a secondary airport receive a generous incentive, sometimes from both airports in the pairing. Without the incentive, the route may be unviable.

Before the most recent venting of public anger, Japan already was seeing a decrease in visitor arrivals from Korea, historically its single largest source market. That suggests underlying change in consumer preference, even if small. The decrease softened in June but Korean visitors to Japan in the first half of the year were down 3.8%. June’s small decrease may have marked a turning point with a recovery expected, but July’s trade and social impacts have dealt a setback.

Weakening visitor numbers imply lower yields, with the combination likely to be revealed in disappointing Korean LCCs second quarter financial results.

Taiwan and Hong Kong also are experiencing decreases in visitors to Japan, albeit not as steep as Korea. But overall, Japan still is seeing tourism growth. The downturn from Korea was concerning as capacity continued to be added, and Korea’s LCCs saw Japan as crowded but still a growth market in the face of constraints elsewhere. Increases in Japanese travellers to Korea have not offset the decreases of Koreans.