[Korean Air B747-8i taking off at Incheon International Airport. News1]
[Financial News] The global political landscape, including the Middle East, is expected to experience significant repercussions as Iran’s Supreme Leader Ayatollah Seyyed Ali Khamenei passed away on the 28th of the local time.
With the rising tension in the Middle East, the aviation and shipping industries in South Korea are on high alert. Korean Air has canceled its Dubai route, and with the potential rise in international oil prices and exchange rates, the overall transportation industry is feeling the pressure.
Korean Air, the only domestic airline operating a Middle Eastern route, has suspended operations… Oil and exchange rates ‘double trouble.’
As Middle Eastern airspace closed, domestic airlines have also adjusted their operations.
Korean Air diverted Flight KE951, which was heading from Incheon to Dubai, in Myanmar’s airspace on the 28th of last month, and also canceled Flight KE952 departing from Dubai. The return flights scheduled for the following day were also preemptively canceled.
Korean Air had been operating the Incheon-Dubai route seven times a week, making it the only domestic airline to do so. The company plans to monitor the local situation and adjust future schedules accordingly.
The aviation industry is closely monitoring the potential rise in oil prices. If aviation fuel prices increase, it will be difficult to offset the cost entirely through increased fuel surcharges, leading to a direct impact on profitability.
The rise in exchange rates is another variable. As major costs such as fuel and aircraft lease fees are paid in dollars, an increase in exchange rates inevitably leads to greater cost burdens.
The shipping industry is also on alert… Considering rerouting.
Domestic shipping companies passing through the Hormuz Strait, the only maritime gateway for the oil from Gulf oil-producing countries like Saudi Arabia, Iraq, Kuwait, and the UAE, are concerned. Companies like SK Shipping and Pan Ocean, which use the strait as a major route, could be directly impacted if the situation worsens.
According to industry reports on the 1st, some foreign shipping lines have already chosen to divert or use alternative routes. Domestic companies are reviewing emergency plans with associations like the Shipping Association and are preparing countermeasures.
In the short term, shipping cost increases are expected due to route diversions, but at the same time, rising international oil prices and insurance premiums could further amplify cost burdens. If the situation prolongs, it could lead to supply chain instability, raising the possibility of expanded market-wide uncertainty.