Jeju Air Co., South Korea’s biggest low-cost carrier, said Tuesday it shifted to a net loss in 2019 from a year earlier due to lower demand for travel on Japanese routes.
Jeju Air swung to a net loss of 34.1 billion won (US$29 million) last year from a net profit of 70.88 billion won a year earlier, the company said in a statement.
“With competition with smaller rivals getting tougher, the bottom line was affected by lower demand on Japanese routes due to local campaigns against Japanese products following Japan’s restrictions of exports to South Korea since July,” the statement said.
Lower demand on Hong Kong routes due to protests against the Chinese government also cut into its bottom line, it said.
In July, Japan tightened regulations on exports to South Korea of three high-tech materials crucial for the production of semiconductors and displays. In August, Japan officially removed South Korea from its list of countries given preferential treatment in trade procedures.
Japan took the moves as retaliation against a Seoul court ruling that ordered Japanese companies to compensate South Korean workers forced into labour during World War II.
Jeju Air also swung to an operating loss of 32.89 billion won last year from an operating profit of 101.2 billion won a year ago. But sales rose 9.9 percent to 1.38 trillion won from 1.26 trillion won over the cited period.
The airline expected weak performance in the first quarter of the year as the spreading new coronavirus outbreak further weighs on travel demand.
Jeju Air has gradually suspended seven out of 17 routes to mainland China since January 29. It also temporarily halted the Incheon-Macao route from Friday and reduced the number of flights on the Incheon-Weihai route from Monday, while planning to halt the Jeju Island-Hong Kong route from February 19.
Jeju Air currently serves eight routes to Hong Kong, Macao and Taiwan.