[THE INVESTOR] The passenger traffic and freight volume of South Korean airlines are on the rise, said a local brokerage firm while upgrading the sector’s stocks to “outperform” from “neutral” on Aug. 9.

“It is a positive signal that they are seeing improvements not only in passenger traffic but also cargo. The recent oil price decline has also increased expectations for air carriers’ earnings in the second half of the year,” said Ryu Jae-hyun, an analyst at Mirae Asset Daewoo.

In July, the number of international passengers at Incheon International Airport surged 44.7 percent on-year. Freight volume rose 7.7 percent during the same period.

“The growth occurred as the impact of the MERS outbreak receded and there is a growing demand for air travel in recent months,” he said.

Mirae Asset Daewoo recommended a “buy” rating on Jeju Air and Asiana Airlines but suggested its clients to take a conservative approach to Korean Air due to risks associated with its debt-ridden affiliate Hanjin Shipping.

By Park Han-na (hnpark@heraldcorp.com)