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Jeju Air closes bases in Vietnam and Japan Move to save costs with travel recovery still far off amid pandemic

Translated by Ryu Ho-joung 공개 2021-08-30 07:35:50

이 기사는 2021년 08월 27일 07:55 더벨 유료페이지에 표출된 기사입니다.

South Korea’s low-cost carrier Jeju Air has shut its bases in Vietnam and Japan as the aviation industry continues to suffer from the effects of Covid-19, a move that could be the first of a series of closures of overseas bases operated by the country’s airlines.

The management committee of Jeju Air’s board of directors unanimously approved closures of its bases in Phu Quoc, Vietnam and Shizuoka, Japan in late June, the company confirmed on Wednesday. The committee consists of the company’s three senior executives including chief executive officer Kim E-bae.

The two bases were closed on June 23 shortly after the decision was made. The closures came one and a half years after the Phu Quoc base was launched in December 2019 and only one year after the Shizuoka base started to operate in the early period of the pandemic.

The move followed the first closure of the airline’s overseas base last fall since the pandemic began. In October, Jeju Air shut its base in Okinawa, Japan, less than five months after the base was opened.

Jeju Air said that the base closures were part of its efforts to save costs. “We decided to close our bases in those places as their lease contracts expired,” said an official at the airline. “We can open new bases in the future if we resume our flights to those cities.”

However, shutting the bases means routes to those cities have a lower priority when the low-cost carrier resumes flights, industry watchers said. Since the outbreak of the pandemic, Jeju Air has not closed but moved its bases in several cities around the world – including Hong Kong, Weihai, Guam, Hanoi, Sapporo and Nagoya – to which flights are potentially profitable.

Industry watchers say this could be the first of a slew of the country’s airlines closing their overseas bases as the industry’s recovery from the pandemic is still far off amid low travel demand. Especially, low-cost carriers with weak financial health could try to stay afloat by cutting costs through closures of their bases.

Jin Air, the low-cost carrier subsidiary of Korean Air, closed its Nagasaki base in May 2020. For T'way Air, there has been no change in the number of overseas bases since the pandemic began. The low-cost carrier shut five overseas bases in Japan, China and Russia in late 2019 to improve profitability as low-cost competition intensified.

“In the aviation industry, closing bases in certain cities does not necessarily mean exiting those cities,” said an industry insider. “Decisions by airlines to close their overseas bases is to save costs, especially with recovery still long way off.” (Reporting by Su-jin Yoo)
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