Jeju Air facing a record number of 68,000 cancellations after the deadliest aviation disaster in South Korea’s history: What new safety concerns you need to know?

Tuesday, December 31, 2024

Jeju Air is grappling with a wave of cancellations and financial turbulence following the tragic crash of Flight 2216 on Sunday, which claimed 179 lives, making it the deadliest aviation disaster in South Korea’s history.

The Boeing 737-800, en route from Thailand to Muan International Airport in South Korea, suffered a bird strike, issued a mayday call, and belly-landed before colliding with a barrier, igniting a fire. Among the 181 people on board, only two flight attendants survived.

Surge in Cancellations and Financial Fallout

Between midnight on Sunday and 1:00 p.m. Monday, approximately 68,000 bookings were canceled, with 33,000 domestic and 34,000 international flights affected, according to Jeju Air. While new bookings continue to be made, the cancellation rate is significantly higher than usual. Many passengers expressed safety concerns, with travel agencies reporting a surge in inquiries about aircraft models and a doubling of tour package cancellations.

Jeju Air’s financial woes deepened as its stock plummeted to a record low on Monday, dropping as much as 15.7% and wiping out 95.7 billion won ($65.2 million) in market capitalization. Shares of AK Holdings, its major shareholder, fell over 12%, hitting a 16-year low. Other domestic tour operators and airlines also experienced market impacts, reflecting shaken consumer confidence.

Monday Incident Exacerbates Safety Worries

Adding to the airline’s challenges, a Jeju Air flight from Seoul to Jeju Island on Monday morning was forced to return to Gimpo International Airport due to a landing gear issue. The aircraft, also a Boeing 737-800, raised further questions about the model’s safety. Local media reported that 21 passengers opted out of boarding a replacement flight, underscoring widespread concern.

Government and Industry Response

South Korea’s acting President Choi Sang-mok has ordered an emergency safety inspection of the nation’s entire airline operation system once recovery efforts for the crash are completed.

Aviation authorities are also conducting a special review of all 101 Boeing 737-800 aircraft operating in the country, with U.S. investigators and Boeing representatives expected to assist.

“Rigorous aviation safety inspections will be implemented to restore public trust and ensure flight safety,” said Joo Jong-wan, head of the aviation policy bureau at South Korea’s transport ministry.

Travel Industry Impact

The crash has shaken the travel industry, with cancellations doubling and bookings halving for some operators. Travel agency stocks weakened, with Hanatour Service falling as much as 7% and Very Good Tour dropping up to 11%. Promotional campaigns and advertisements were suspended as agencies scrambled to address customer concerns.

Despite the immediate fallout, analysts believe the long-term impact on travel demand may be limited. Yang Seung-yoon, an analyst at Eugene Investment Securities, commented, “In terms of overall travel demand, there might be some cancellations in the short term, but it is unlikely to weaken structurally.”

Outlook for Jeju Air

Founded in 2005, Jeju Air is South Korea’s third-largest airline by passenger numbers. The Sunday crash marks its first fatal accident, putting its safety record and reputation under intense scrutiny. As the investigation continues and inspections are conducted, the airline faces the daunting task of restoring public trust while navigating the economic and operational challenges ahead.

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Tags: aviation, Jeju Air, Muan International Airport, south korea