Asiana losing money on Saipan route

The rapid and extreme depreciation of the Korean won continues to impact Kumho Asiana’s future in the CNMI.

Through October the company lost $5 million on Asiana’s Saipan–South Korea flight route due to fewer Korean visitors, said Kwang Joong Kim, general manager for Asiana Airlines’ Saipan sales office.

Last month, the load factor was approximately 55 percent, compared to nearly 85 percent during the same period last year.

“I’m losing a lot on this route. I’m scared,” Kim said.

Asiana currently has 18 flights from Korea and will add three more from Osaka, Japan, by the end of the month. Several of Asiana’s flights from Korea were added after its parent company, Kumho Asiana, purchased Laolao Bay Golf Resort in February 2007. The completion date of the approximately $68 million project has been pushed back to the end of 2009 due to the downturn in the Korean economy.

When the company invested in Laolao, part of the commitment to the CNMI was to increase daytime flights, Kim said.

Asked if Asiana will reduce the number of flights, Kim said, “Because of Laolao investment, we’re going to do our best….so we want to continue, but we are not sure because of [the] too difficult situation right now.”

He said he hopes the exchange rate improves because that is the key factor.

“[It’s] very serious, serious impact to the Korean tourist,” he added.

In August, the exchange rate was approximately 1,000 won to $1 dollar. As of yesterday, the rate is 1,485.

Kim still believes the CNMI is an ideal place for Koreans looking for a tropical location with an American culture. The CNMI tourism has a bright future, he said.

“That’s why we invested here. We hope this should be successful,” he said.

In October, when Asian added three additional flights to and from Incheon, South Korea, the company said it was anticipating an 80-percent load factor, allowing for as many as 43,000 additional visitors each year to the CNMI.

In November 2007, the Marianas Visitors Authority reported that the CNMI stood to gain $20 million in direct tax revenues from Asiana Airlines in 2008, based on the assumption that the airline could fill at least 80 percent of its seats. In addition, MVA reported, the operations also could bring $59 million in on-island expenditure to the CNMI, $23 million in hotel revenue and $2.3 million in hotel occupancy taxes.