The South Korean government is forecasting that international passenger traffic this year will reach a record high – despite falling traffic from Japan, which has been hit by the strength of the yen.

 

The Ministry of Land, Infrastructure and Transport (Molit) says that, based on current growth trends, it is expected that annual international passenger volumes “will easily reach” 50m, up from 47.7m in 2013.

 

The 50m barrier is significant in a year when Japanese travel has been falling, because it demonstrates the strength of mainland Chinese travel which has more than compensated. In the half year to June, international passenger volumes to South Korea grew by +6.7% compared to the same period in 2012, recording 24.4m which is the highest first half record ever. This contrasts with a decline in domestic passenger volumes of -2.5% to 10.69m.

 

In the same period, as previously reported, the country’s two main duty free and travel retailers, Lotte (below) and Shilla, saw their combined sales reach $2.27bn, up +6% and up +3.5% respectively, thanks largely to more Chinese shoppers. DF&TR sales are already predicted to top $6bn across the South Korean market in 2013.

 

In HY1, according to Molit, routes to China and Southeast Asia saw an increase of +13.0% and +10.0% respectively which led the growth momentum, followed by western markets like  Europe (+7.5%) and the US (+2.6%). Growth was seen in all regions except for Japan and was helped by the speedy expansion of low-cost carrier international services whose share of the marker grew to 9.5% [in HY1 2010 it was just 1.8%].

 

The government expects the growth trend to continue supported by the Korean summer vacation, the Chuseok thanksgiving holidays, the Formula 1 Korean Grand Prix (4-6 October), and the International Garden Exposition in Suncheon Bay (which ends 20 October), as well as the continued expansion of LCC services. Risk factors include North Korean relations and avian influenza in China.