South Korea’s aviation industry is making a strong resurgence, with passenger numbers reaching and even exceeding pre-pandemic levels. In the first half of 2025, a total of 47 million passengers traveled via domestic airlines—an increase of 28% compared to 2023—fueled by a rebound in tourism, favorable currency conditions, and significant infrastructure investments. This trend highlights a broader economic recovery and presents promising investment opportunities in airport development, sustainable aviation fuels (SAF), and urban air mobility (UAM).
Tourism: The Engine of Recovery
The revival of international travel has been the main driver of this growth. Passengers flying between South Korea and Japan or China reached 11.25 million in the first five months of 2025, representing a 10.7% rise from 2024 and a 19.8% increase compared to pre-pandemic figures. The depreciation of the Japanese yen and South Korean won has made travel more affordable, while China’s visa-free policy for South Korean citizens has reinvigorated cross-border tourism. By the end of 2025, total passenger numbers could surpass 100 million, exceeding the 2019 peak of 93.47 million.
Domestic travel is also thriving, particularly to Jeju Island, where airport passenger numbers doubled to 2.43 million in 2024. Low-cost carriers (LCCs) such as Jeju Air and Jin Air are capitalizing on this demand by expanding short-haul routes to Japan and Southeast Asia. Analysts project that LCCs will increase their market share in the Asia-Pacific region to 45% by 2027, up from 30% in 2019.
Infrastructure: Building for Future Growth
To support this rising demand, South Korea is making major investments in aviation infrastructure. Incheon International Airport, the country’s primary hub, completed its Phase 4 expansion in 2024, adding a fourth runway and increasing annual capacity to 106 million passengers. A new $900 million Terminal 1 modernization project, set to begin in 2025, will further improve operational efficiency. By 2030, Incheon aims to serve 130 million passengers annually, reinforcing its status as a global aviation hub.
Additionally, the Gadeokdo New Airport project, scheduled to open in 2029, will add 17 million annual passengers and 286,000 tons of cargo capacity. This $9.8 billion offshore airport near Busan is designed to reduce congestion and enhance regional connectivity. Investors should closely follow progress on land acquisition and contractor selection, as potential delays could affect the project timeline.
Sustainable Aviation Fuels (SAF): A Green Horizon
South Korea is also advancing sustainability in aviation. By 2027, the government will require a 1% blend of SAF in aviation fuel, increasing to 5% by 2030. Key players such as SK Innovation and S-Oil are already investing in SAF production, with SK Innovation supplying fuel to Cathay Pacific and planning further expansion. With tax incentives of 15–25% for SAF producers, this sector is poised for growth. By 2030, the global SAF market could reach $45 billion, offering South Korean companies a strategic advantage.
Urban Air Mobility (UAM): The Future Takes Off
The government’s UAM initiative includes plans for air corridors between Seoul and Incheon by 2025, featuring autonomous drones and vertiports. Trial UAM shuttle services began in late 2024, while drone deliveries in Sejong City demonstrate future logistics applications. Investors should watch for collaborations between tech firms like LIG Nex1 and airport operators, as well as progress in AI-based navigation systems. By 2035, fully autonomous UAM could transform urban transportation, opening opportunities in real estate (vertiports) and technology infrastructure.
Investment Outlook
– Airports & Airlines: Incheon International Airport Corporation (IIAC) and LCCs such as Jeju Air are well-positioned for growth. Investors should track stock performance and expansion schedules.
– SAF Producers: Companies like SK Innovation and S-Oil benefit from regulatory mandates and tax incentives.
– UAM Tech: Firms involved in drone logistics and AI navigation, including Pilot Square, may experience growth.
– Risks: High production costs for SAF, regulatory challenges for UAM, and potential delays in infrastructure projects—such as land disputes at Gadeokdo—remain key concerns.
Conclusion
South Korea’s aviation sector reflects the country’s broader economic resilience. With tourism fueling demand and infrastructure upgrades expanding capacity, the path to a post-pandemic recovery is clear. Investors should focus on companies positioned at the intersection of growth and sustainability—airports, SAF leaders, and UAM innovators. However, managing cost pressures and aligning with regulatory developments will be essential to successfully navigating this emerging opportunity.
The skies are open—now is the time to board.
— news from AInvest