Asiana feels chill in air travel from frosty South Korea-Japan ties

SEOUL (Reuters) - South Korea’s Asiana Airlines Inc (020560.KS) said on Tuesday it plans to switch to smaller planes for some of its Japan routes starting September due to declining demand amid a worsening diplomatic and economic row between South Korea and Japan.

The country’s second-largest full-fledged carrier does not currently have plans to discontinue any routes to Japan, but it is monitoring the situation, a spokesman at Asiana Airlines told Reuters.

Asiana Airlines said it will fly smaller aircraft for three routes to Japan’s Osaka, Fukuoka and Okinawa departing from the country’s capital Seoul.

Last month, Japan tightened controls of exports of high-tech materials to South Korea, in apparent retaliation for a South Korean court ruling over wartime forced labor.

The ill-feeling has led to a widespread boycott of Japanese products and services, including air travel.

But South Korea’s airline and tourism firms have been also grappling with rising competition and falling travel demand to Japan - a destination that had been popular among younger tourists.

Korean visitors to Japan tripled over the last five years, and in 2018 accounted for 24.2% of total visitors, making them the second largest after visitors from China, according to Japan National Tourism Organisation data. But latest figures showed South Korean visitors during the first half of this year were 4% down on year-ago levels.

South Korea’s top carrier Korean Air Lines Co Ltd (003490.KS) on Monday said it will suspend flights between the South Korean city of Busan and Japan’s Sapporo from Sept. 3, citing lean demand.

Several budget carriers including T’way Air Co Ltd (091810.KS) and Eastar Jet will temporarily halt some of its Japan routes from September, but the decision was taken before the dispute started, industry sources said.

Asiana's share weakened by 0.2% on Tuesday while the broader KOSPI market .KS11 was up 0.7%.

Investors in the share market have looked for South Korean firms that could benefit from a boycott of Japanese competitors.

On Tuesday, shares in Korean apparel maker TBH Global Co Ltd (084870.KS) and underwear maker Sbw Inc (102280.KS) both jumped nearly 30%, on expectations that they would sell more as a result of South Koreans shunning Uniqlo, owned by Japan’s Fast Retailing Co Ltd (9983.T).