Strong international demand gives South Korean airlines a good platform for next phase of growth

South Korea's international passenger traffic has almost recovered to pre-pandemic levels and exceeds them in some key markets, while there are also promising signs in sectors that have been lagging.

The rate of the country's capacity growth slowed in the first half of this year, as most aircraft were returned to service and the majority of routes resumed. Unsurprisingly, the main markets that have yet to fully recover are between South Korea and China and Japan.

As with many other Asia-Pacific airlines, South Korean airlines are seeing increasing competition and rising costs. This spurred a more cautious approach to growth, which has helped boost international load factors to higher levels.

Weakness in Japan and China demand has been partially offset by surging demand on flights to places such as the US and Western Europe.

Looking ahead, there appears to be growing confidence in the China market. Korean Air has revealed plans to resume more routes in its China network, significantly lifting its capacity there.

This indicates that demand is rising enough to warrant more services. It is also adding more Japanese flights, although to a lesser extent than in China.

Meanwhile, some of South Korea's secondary airlines are also eyeing growth prospects, boosted by the likelihood of gaining valuable routes given up by Korean Air in order to win approval for its Asiana takeover.