Japan's entry restrictions deal bigger blow to airlines, travel agencies

(Yonhap)

Japan's entry restrictions for visitors from South Korea are dealing another blow to airlines and travel agencies already hit by the fast-spreading coronavirus outbreak, the companies said Friday.

Local airlines and travel agencies have been struggling with a sharp decline in air travel demand for more than a month after South Korea's first confirmed COVID-19 case was reported on Jan. 20.

Adding to their woes, Japan announced Thursday that visitors from South Korea and China will have to stay at designated facilities for two weeks to be checked for infections and refrain from using public transportation. Japan also plans to suspend the 90-day visa-free entry program for South Koreans on Monday.

In reaction to the move, Seoul said Friday it may take similar steps against inbound passengers from Japan "under the principle of reciprocity."

The Japanese move prompted Korean Air Lines Co., the country's biggest airline and national flag carrier, to temporarily suspend most of its flights on 18 routes to the neighboring country starting Sunday.

Asiana Airlines Inc., the second-biggest airline, said it is considering suspending all of its flights to Japan due to Japan's entry restrictions. It currently operates eight routes to six Japanese cities.

The two full-service carriers have continued to reduce or suspend flights on domestic and international routes since February.

Korean Air said 80 percent of its overall flights were not in operation as of March 2. It had provided passenger and cargo carrying services to 115 cities in 44 countries before the coronavirus hit.  

Jeju Air Co., the country's largest low-cost carrier, said it will soon decide whether to continue flights to Japan. It now serves flights on eight routes to six Japanese cities, down from 11 routes and eight cities.

As of Friday morning, South Korea had reported 6,284 confirmed cases of the novel virus and 42 deaths. At least 100 countries and territories plan to enforce or are imposing entry restrictions for visitors from South Korea.

Six other budget carriers -- Jin Air, Air Busan, Air Seoul, Eastar Jet, T'way and Fly Gangwon -- have already suspended all or most of their flights on international routes. Most of them have entered an emergency management system to stay afloat.

Among industries affected by the virus outbreak, travel agencies are also bearing the brunt.

Most local travel agencies are deeply concerned about poor earnings results for the first quarter and a forced restructuring as bookings for overseas travel have fallen to rock bottom this month.

"The company asked all of its 5,000 employees to work for three days a week in March as there are no flight bookings for domestic and overseas travel," Lee Jae-min, who runs a Hana Tour travel agency in Seoul, said.

Travel agencies -- which mainly handle travel packages, business trips for local companies and cruise travel products -- will suffer the most from the coronavirus fallout in terms of business results, Lee said.  

The Korea Association of Travel Agents, which represents 1,200 out of the country's 18,000 travel companies, is concerned that if airlines continue to suspend flights, many agencies will end up going bankrupt, KATA spokesperson Koo Jeong-hwan said.

"The airline and travel businesses are not alone. The virus outbreak is having negative implications for related industries -- hotels, duty free shops and restaurants, to name just a few," the spokesperson said.

KATA recently called for financial support from the government as their members badly need to maintain their workforce because the travel business, unlike manufacturers, depends heavily on experienced human resources, he said.

Airline and tourism stocks retreated Friday on concerns of poor earnings for the first quarter. As of 2:30 p.m., Korean Air had plunged 5.8 percent to 23,600 won, Asiana was down 3.4 percent at 4,245 won and Jeju Air had shed 3.2 percent to hit 21,500 won. They all underperformed the broader KOSPI's 2.2 percent loss.