South Korean airlines, hoping for a World Cup boom, have been left stranded by the fewer-than-expected number of visitors.
This represents a second blow to the airline after last year’s terrorist attacks in the United States.
The share price of national flag carrier Korean Air Company (KAL) fell 7,7% to close at 6,900 won ($13,9) on Monday due to worries about the number of visitors, analysts said.
Korean Air is the official South Korean World Cup airline but rival Asiana Airlines also declined 0,8% to 3,300 won.
”Expectations that (KAL) would benefit from the World Cup have not materialised,” said Shinyoung Securities analyst Chae Kyong-Sup.
Amid the global economic downturn, worsened by the September 11 terrorist attacks, Korean Air suffered a net loss of 589-billion won on 5,67-trillion won in sales last year.
But it had hoped to return to profit this year due to growing demand for flights to the first World Cup in Asia.
”The World Cup will not have any major impact on its profit numbers,” Chae said, adding Korean Air had expected 100-billion won in extra revenue from the football extravaganza.
South Korean tourism authorities had predicted that the soccer festival could attract up to 500 000 foreign tourists. But the number of foreigners who have visited the country so far was far lower than anticipated.
KAL and Asiana were also hit by weak demand at home, with Koreans staying at home during the tournament, which began on May 31.
Chae said KAL could benefit from the won’s appreciation against the dollar and a recovering economy in the second half.
”A stronger won cuts the company’s fuel and interest costs. At the same time, a recovering economy should not only boost passenger numbers but also cargo flight demand later this year,” he said.
KAL has stepped up a drive to cut costs and raise cash to overcome the fall in demand and rising insurance costs after September 11.
The aviation industry is not alone in having to scale down their World Cup hopes. South Korean hotels have also complained that room reservations have not lived up to expectations.
The tourism industry in Busan, the country’s second largest city, is experiencing disappointing sales, with Japanese tourists opting to stay home to watch matches. Reservation rates on flights between Busan and Japan have fallen about 50% compared with last year.
The main sufferer, however, is the Korean World Cup Organising Committee (Kowoc), which has been battered by slow ticket sales abroad.
Kowoc officials blamed Fifa for the ticket problems, which left thousands of seats empty during the opening matches.
The ticket problems prompted a crisis meeting between football’s world governing body and Japanese and Korean World Cup organisers on Monday. – Sapa-AFP