New Busan-Helsinki Route Irks Korean Carriers

Finnair will start direct flights between Busan and Helsinki next year as a result of President Moon Jae-in's summit with his Finnish counterpart Sauli Niinistö on Monday, but although Korean carriers are sore, they are refusing to compete.

The Ministry of Land, Infrastructure and Transport announced the same day that Finnair will operate Busan-Helsinki route three times a week from March 30, 2020, the first direct flight to Europe from Busan's Gimhae International Airport.

That is bad news for Korean airlines, which stand to lose business as passengers from southern parts are expected to fly to Europe from Gimhae instead of using their established routes from Incheon International Airport.

The ministry said it will open the Busan-Helsinki route to Korean airlines subject to applications in the second half of this year, but neither Korean Air nor Asiana Airlines are likely to apply. 

 

"People in southern parts have had to travel all the way to Incheon by domestic flight or train to take the long-haul flights to Europe, but this will give them an option to fly direct," said a ministry official. Helsinki is a regional hub with over 100 connections to cities in Europe.

But even though they are opting out, Korean airlines are grumbling since Finnair also flies the Incheon-Helsinki route alone and the new route will only expand its customer base.

Passenger numbers from Incheon to Helsinki rose from 176,780 in 2016 to 217,082 in 2018 because it is the fastest route to Europe, taking just nine hours and 35 minutes over the Arctic. Some 81.4 percent were just passing through to get to other European destinations.

The International Air Transport Association forecasts that only about 570 people per year will use the Busan-Helsinki route to visit Finland, while the rest will use it for transfer.

One executive at a Korean airline complained, "We already have direct or indirect routes to major European cities, so it's a losing game to open a new direct route just to compete with Finnair as it would decrease the number of passengers on existing routes and would cost us a lot of money setting up a new office and maintaining it."

The industry predicts a loss of W30 billion for Korean carriers from the new Busan-Helsinki route (US$1=W1,183). "It is with regret that we receive the news of the government's decision without consideration of the Korean airline industry," said one industry insider. "An aviation agreement should benefit all participating parties, but that's not the case here."

The decision conflicts with stated government policy to make Incheon the aviation hub of Northeast Asia, since that would require long-haul flights to Europe and America being concentrated on Incheon

Finnair had been lobbying for the Busan-Helsinki route since 2014 but come up against Korean protectionism. Critics grumble that the decision to open the route was aimed at winning regional votes in the upcoming general election.