Market Trends of south korea aviation Industry
Air passenger traffic in the country recovered significantly, reaching near pre-COVID-19 levels
- Air passenger traffic in South Korea increased by 11% from 2017 to 2022. The market share of international air passenger traffic of South Korean low-cost carriers (LCC) increased to 32% in 2022. That is a significant increase from just 5% the year before. The LCCs' growth has been at the expense of the market shares of Korean full-service carriers (FSC) and international carriers.
- Domestic and foreign airlines made 539,788 flights over South Korea in 2022, up from 465,469 flights in 2021. As per the South Korean Ministry of Land and Infrastructure, the 2022 flights still stood at 65% of the pre-pandemic levels.
- The number of air passengers in South Korea recovered to nearly 84% of the pre-pandemic level in July 2022. The number of international flight passengers tripled to 6.38 million in July from a year ago. Still, domestic flight passengers dropped about 18% on-year to 2.59 million as more people traveled abroad. The flight passenger tally is expected to recover to about 85% of the pre-pandemic level by the end of 2023. The air passenger traffic in the country is expected to surge by over 125 million in 2030.
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South Korea has committed to strengthening its defense technology partnerships with its American counterparts and broadening its security partnerships
- The South Korean military expenditure reached USD 46 billion in 2022. It declined by about 9% in 2022, but about 5% during 2019-2022 and by 18% between 2017-2022. In its Mid-Term Defense Plan for 2022–2026, the Ministry of National Defense increased its defense budget to USD 271.5 billion. The plan projects an average 5.8% annual budget increase. About USD 90 billion will be spent on military-specific interventions for cutting-edge military technology. The MND and the South Korean procurement agency Defense Acquisition Program Administration (DAPA) allocated USD 15 billion for purchase and R&D in 2021. To strengthen its defense cooperation with the US and the Indo-Pacific region, South Korea committed to significant defense technology cooperation with its US counterparts and diversifying its security alliances with other nations, such as Australia, India, and ASEAN countries.
- In May 2018, an agreement for the purchase of 36 AH-64E Apache helicopters was signed by the South Korean government and the US Department of Defense (DoD). The deal, estimated to be worth USD 96.3 million, was completed by April 2023. According to a contract between the government and Korea Aerospace Industries, South Korea will acquire 70 Surion utility helicopters by 2022. The KAI agreed to provide 30 Surion helicopters to the Marine Corps by 2023 and 70 to the Army by 2022. The MND also included the KF-21 fighter aircraft development program run by Korea Aerospace Industries (KAI). The KF-21 is intended to replace the F-5E/F Tiger IIs, F-4 Phantoms, several aged F-16C/Ds, and F-15K Slam Eagles. The MND proposed funding of USD 350 million for this project in their budget for 2022.
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OTHER KEY INDUSTRY TRENDS COVERED IN THE REPORT
- Cargo's business revenue from major airline Korea Air dropped by 51% in 2023 compared to 2022
- The strong recovery in the passenger aviation sector led to a surge in revenue passenger kilometers in the country
- South Korea’s ongoing domestic initiatives indicate the country’s emphasis on strengthening its defense posture and increasing its competitive advantage
- Strong recovery and growth in the manufacturing sector are expected to aid South Korea's GDP in 2023-2030
- The acceleration in inflation is expected to put renewed upward pressure on policymakers to increase interest rates
- The majority of the HNWIs in the country belong to sectors real estate and financial investments
