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Escalating tensions between China and South Korea over the deployment of a U.S. missile defense system are now threatening to engulf air travel as some carriers start to suspend popular services between the two countries.
Eastar Jet, a South Korean budget airline, said on its website that flights from Cheongju to China’s Harbin, Ningbo and Jinjiang will be stopped temporarily starting as early as March 15 through Oct. 28 because of “worsening relations.” Seoul-based Jin Air, a unit of Korean Air Lines Co., said it is reviewing its flights from Jeju to Shanghai and Xian and preemptively restricted bookings to avoid disruptions.
Spring Airlines Co., China’s biggest budget carrier, canceled flights from Ningbo to Jeju March 15 through 26, and a spokesman said it was due to “changing market conditions.” Jeju Air, a Korean low-cost operator, said the airline’s request for charter flight in March to Ordos in Inner Mongolia was rejected by the Chinese authorities.
Travel curbs imposed by China on mainlanders with plans for a vacation in South Korea are likely to cut revenue at airlines, travel agencies, package tour operators and cruises by about $5 billion, according to estimates by Goldman Sachs Group Inc. The China National Tourism Administration verbally ordered local travel agencies to stop selling tours to South Korea starting March 15, the state-run Korea Tourism Organization said last week.
More than 8 million Chinese visited South Korea last year and Chinese make up 85 percent of tourists to the resort island of Jeju.
Some sea-cruise operators are also pulling back. Royal Caribbean Cruises Ltd. said Thursday on its Chinese website that it will cancel port calls to South Korea and replace them with some in Japan for vessels that sail as early as March 17. Costa Cruises, controlled by Carnival Corp., is also scrapping calls to South Korean ports and re-routing them to Japan.
China is concerned that the U.S. missile shield — called Thaad — will alter the balance of power in the region, and is lashing out by squeezing South Korean businesses on its soil and by discouraging citizens from traveling to popular tourist destinations such as Jeju Island. The Lotte Group, the Korean conglomerate that offered land to house Thaad, said this week that as many as 55 of its retail stores in China were suspended.
The U.S. military said this week that the Terminal High Altitude Area Defense system was aimed solely at defending Seoul against potential missile attacks by North Korea.
Spring Air’s spokesman said tourism and airlines should be “markedly affected” by the ongoing situation between China and South Korea, adding the carrier’s schedule after March 26, when the summer-autumn flight season kicks off, will be adjusted accordingly.
However, the stoppage of services wasn’t widespread. China Eastern Airlines Corp. said ticket sales to South Korea remain normal.
In response to the shuttering of Lotte Mart’s businesses in China, the foreign ministry in Beijing said Monday that the government welcomes “the investment and operation of foreign companies” and protects their “lawful rights and interests in accordance with the law, as long as their businesses abide by laws and regulations.”
South Korean Trade Minister Joo Hyung-hwan said March 5, he was “deeply concerned about the measures taken in China,” and that the government will seek recourse in international law should China violate its trade commitments.
©2017 Bloomberg L.P.