Korean Air and Asiana Airlines are enjoying rising earnings, fueled by increased cargo volume driven by the success of Chinese e-commerce firms in the region, according to data and industry officials, Monday.
Data from the Ministry of Land, Infrastructure and Transport showed that the quantity of goods transported by a group of 11 local carriers on international flights reached 2.33 million tons in the first 10 months of this year, up 12.4 percent compared to 2023.
This helped the carriers report solid earnings growth in the third quarter. According to a regulatory filing by Korean Air, the nation's flag carrier chalked up robust cargo sales growth of 22 percent between July and September from a year earlier.
Buoyed by the cargo business growth, the airline achieved record quarterly sales of 4.24 trillion won ($3.02 billion) in the third quarter, up 10 percent from a year ago.
Industry officials attributed the cargo growth to the increased access Korean shoppers have to global products through Chinese e-commerce platforms like AliExpress and Temu.
"No one can dispute that it has become much easier for local customers to purchase overseas goods via such platforms at super-cheap prices," an aviation industry official said.
"Even if it is hard to pinpoint how much the platforms account for airlines' cargo business growth, they are expected to have had a considerable impact, as the third quarter is widely considered as slow season for the cargo business."
According to data from market tracker, IGAWorks, the number of AliExpress' monthly active users reached 7.02 million in October, up more than 25 percent from January.
Asiana Airlines also generated robust sales in the third quarter. The airline achieved cargo sales growth of 19.3 percent during that period.
The solid earnings growth of major airlines here is significant, as it was achieved despite the persistent weakness of the Korean won against the U.S. dollar. The stronger dollar presents a growing financial burden on airlines, as they face higher costs for fuel and aircraft leases, both of which are paid in U.S. dollars.
Market analysts painted a rosy picture for the airlines, suggesting that they will extend their winning streaks in the fourth quarter.
"Aside from the cargo business, they are expected to continue on a stable growth path in the final quarter, driven by increasing passenger demand from the United States, Japan, China, and Southeast Asia," said Yang Ji-hwan, an analyst at Daishin Securities.
The Chinese e-commerce platforms will also come as a strong growth driver to the airlines' cargo businesses by the end of this year, according to the analyst.