Insights

While global airline passenger traffic heads toward 10 billion people by 2050, Korea's aviation industry is trapped in the world's slowest-growing market. In this report, Samjong KPMG concludes that Korea's airline industry has reached the growth limits of its existing business model. Global commercial airline revenue is projected to rise to USD 979 billion in 2025, yet Northeast Asia, which includes Korea and Japan, has the lowest 20-year growth outlook among the surveyed regions at 2.4% annually, well below the global average of 4.2%.

Only Korean Air remains profitable, deepening concern across the industry. Of Korea's 12 commercial airlines, six are listed companies subject to periodic disclosure. Korean Air was the only one to sustain an operating profit in 2025; the other five, including Asiana Airlines, either moved into the red or saw losses widen. Supply has reached saturation as international passenger numbers at Korean airports exceed 90 million, while the Korean Air–Asiana combination is reshaping the industry around a merged carrier with a combined market share of 47.7%. At the same time, aging aircraft are raising MRO costs and aircraft manufacturers are delaying deliveries of new planes, adding further cost pressure.

Pressure across price, quantity, and cost — and a three-stage response. The report diagnoses downward pressure on price due to expanding supply and intensifying competition, stagnant demand amid macroeconomic uncertainty and business-model saturation, and structurally rising costs led by labor, maintenance, and fuel. It proposes a phased response: ① short-term efficiency and monetization through AI-based demand and schedule optimization, stronger ancillary revenue, and upgraded premium seating and memberships; ② medium-term restructuring through consolidation M&A and network realignment, strategic alliances and equity investments, and refinement of multi-brand strategies; and ③ long-term ecosystem expansion through commercialized MRO and third-party contracts, entry into urban air mobility and future mobility, travel platforms and non-aviation revenue, and adjacent aerospace and defense businesses.

Implications for M&A. First, after the launch of the merged carrier, a second wave of restructuring transactions is likely as hubs, slots, and routes are reallocated, including further consolidation and alliances among low-cost carriers. Second, the commercialization and separation through carve-outs of aviation value-chain activities such as MRO and ground handling may create attractive investment opportunities for financial investors seeking stable cash-flow assets. Third, airlines' ecosystem-expansion strategies are likely to catalyze bolt-on acquisitions of and equity investments in technology companies across urban air mobility, travel platforms, and aerospace.