Of the world’s 50 busiest airports in 2016, 16 (or roughly a third) were in fast-growing East Asia. And which of these 16 saw the fastest growth of all?
Perhaps a Chinese boomtown airport like Kunming? Well, it was No. 2. The answer, perhaps surprisingly, is Seoul Incheon. And in percentage growth terms, it wasn’t even close.
Last year, South Korea’s largest airport saw passenger volumes soar an eye-popping 17% —to 58m—on a 13% increase in flights, a stunning increase off an already-high base. Of the global top 50, only Doha and Delhi grew faster, in each case with more obvious engines of growth: in India’s case an economy that expanded 7% and in Qatar’s a national airline that expanded without apparent regard to profitability.
So what drove the surge in Seoul?
Give a little credit to traffic merely bouncing back from the MERS virus scare that depressed traffic during 2015’s peak season. But that’s hardly the main story. Far from being a year of contraction, 2015 itself was a strong growth year for Incheon, with traffic up 8% despite the MERS setback. Compared to 2014, in fact, Incheon’s passenger volumes have ballooned by a phenomenal 27%. And so far in 2017? Through August, traffic is up another 7% despite another demand shock: strained ties with China affecting inbound tourism—Chinese arrivals this spring were down by about a fifth y/y.
What makes Incheon’s growth even more extraordinary is the fact that South Korea’s largest airline is shrinking. In the first half of this year, Korean Air’s ASK capacity declined almost 2% y/y. And the country’s second largest airline? Asiana’s ASKs were up a bit, although its flights and (more relevant for passenger traffic figures) seats were fewer this first half than last. So where is all the growth coming from?
The answer mostly lies with LCCs, led by the dynamic upstart Jeju Air, which last quarter expanded ASK capacity by a third, and even faster than that at Incheon alone. It did so, furthermore, while earning a solid 7% operating margin. Jeju Air earned a solid profit all of last year too, and although most of its revenue still comes from South Korea’s domestic market, most of its new flying is to neighboring markets like Japan. South Korea has another growing LCC called Eastar Jet. And still another in T’Way Air, reborn from the defunct Hansung…
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