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China-Korea aviation: airlines impacted by politics; HNA weighs larger Asiana Airlines stake

Political disputes are once again impacting aviation and tourism – this time between China and Korea, which is the largest international market in Asia.

Following a dispute over Korea's deployment of US military equipment, China has encouraged travel agencies to stop selling Korea to China's expanding outbound visitor market.

The implications are stark for Korea, where Chinese visitors constituted 47% of all visitors in 2016. Chinese visitor volume has dropped to levels seen in 2015, during the MERS epidemic. In summer 2017 there is a 29% reduction in nonstop seat capacity. Asiana Airlines and Korean Air are the largest operators between Korea and China, and also have a significant proportion of their total network exposed to China.

Once this matter comes to pass, Korea will need to decide whether it will allow China's HNA Group to further its investment in Kumho, the owner of Asiana Airlines.

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