Domestic carriers jittery over Korea-UAE aviation talks

South Korea’s aviation industry is on the edge with the aviation talks this week between South Korea and the United Arab Emirates, over the latter’s demand to double the route allocation.

During the summit being held on Wednesday-Thursday in Abu Dhabi attended by Korea’s Transport Ministry officials, their UAE counterparts are likely to request increasing the Incheon-Dubai and Incheon-Abu Dhabi routes up to 14 times a week, according to industry sources.

Their previous talks in June fell apart due to differences over the same issue.

Currently, Dubai-based air carrier Emirates operates the Incheon-Dubai route seven times a week, while UAE’s second-largest airline Etihad Airways flies on the Incheon-Abu Dhabi route seven times a week.
Among domestic airlines, Korean Air runs the Incheon-Dubai route seven times a week. 

Local airlines have been voicing concerns that Korean air carriers will lose their price competitiveness, as well as a large portion of passengers traveling to European cities, if South Korea accepts their demand. 

According to International Air Transport Association data, 72 percent passengers flying with Emirates and 63 percent of Etihad airline passengers last year headed to Europe or Africa. 

The fares for Incheon-UAE routes operated by UAE airlines are about 20-30 percent cheaper than that of Korean Air, as they are reportedly backed by government subsidies.

According to the US aviation authorities, Qatar and the UAE government have invested $52 billion in the flagship carriers including Qatar Airways, Emirates and Etihad since 2004. 

Backed by the investments, UAE airlines has been rapidly upgrading its flight models, putting its latest airplanes on Incheon-UAE routes such as Airbus’ A380 that has over 480 seats. Korean Air can seat 218 passengers in A330 for the Dubai route. 

“The UAE route is significant (to Korean air carriers as well) because it is closely related to European routes. When Korean air carriers reduce their UAE and European routes, passengers will face all damages and inconvenience,” said an industry insider.

Emirates, as a late starter in the aviation business, began with two airplanes and three routes in 1985. In three decades, it secured the No. 1 position in terms of international aviation and cargo volume, operating in the black for 31 years in a row.

As of this year, Emirates flies 270 airplanes to 86 countries with 158 routes. Its cash reserves are some 7.2 trillion won. 

By Kim Da-sol (ddd@heraldcorp.com)