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South Korea Expands Fuel Tax Cuts as Airlines Slash Flights Amid Oil Spike

South Korea's finance ministry announced a significant expansion of temporary fuel tax cuts, increasing reductions on gasoline and diesel to 15% and 25% respectively, and extending the measure through May. The move aims to alleviate the financial strain on consumers and businesses from rising oil prices linked to prolonged Middle East tensions. Concurrently, multiple low-cost carriers are cutting international flights, including routes to the US and Southeast Asia, to mitigate soaring jet fuel costs. Industry data shows jet fuel prices in Asia surged over 16% in a single week, prompting widespread operational adjustments across the aviation sector.

Key Points: S. Korea Expands Fuel Tax Cuts, Budget Airlines Cut Flights

  • Fuel tax cuts doubled to 15-25%
  • Tax relief extended through May
  • Budget airlines cancel US & SE Asia flights
  • Jet fuel prices surge 16.6% weekly
  • Measures respond to prolonged Middle East conflict
2 min read

S. Korea to expand fuel tax cuts; budget airlines cut flights

South Korea extends and deepens fuel tax cuts to ease consumer burden, while budget airlines cancel international flights due to soaring jet fuel costs.

"The decision is aimed at easing the burden of rising oil prices and supporting small and midsize businesses, as well as vulnerable households. - Finance Ministry"

Seoul, March 26

South Korea will significantly expand its temporary fuel tax cut in a bid to ease the financial burden on consumers amid the prolonged conflict in the Middle East, the finance ministry said on Thursday.

Under the latest measures to support people's livelihoods, the current tax cuts -- 7 percent on gasoline and 10 percent on diesel -- will be expanded to 15 percent and 25 percent, respectively, reports Yonhap news agency.

The measure, which had been set to expire in April, will be extended through the end of May, according to the ministry.

As a result, fuel taxes per litre, including value-added tax, will fall by 65 won (US$0.04) to 698 won for gasoline and by 87 won to 436 won for diesel.

The decision is aimed at easing the burden of rising oil prices and supporting small and midsize businesses, as well as vulnerable households affected by the prolonged conflict.

South Korea first introduced the fuel tax cut in November 2021 as a response to rising energy prices. The government has since extended the measure, adjusting the rates in accordance with changes in the global energy market.

Meanwhile, South Korea's low-cost carriers (LCCs) are cutting international flights to mitigate the impact of surging fuel costs amid prolonged tensions in the Middle East, industry sources said on Thursday.

Air Premia Co. plans to suspend 10 flights on its Incheon-San Francisco and Incheon-New York routes in May, following an earlier decision to cancel 26 flights on the Incheon-Los Angeles route and six on the Incheon-Honolulu route between April 20 and May 31, the sources said.

Eastar Jet Co. plans to suspend 50 flights on the Incheon-Phu Quoc route from May 5 to May 31, citing limited local refueling conditions in Vietnam.

Air Busan Co. and Aero K Airlines Co. have already reduced flights on some international routes starting in April.

The country's three largest LCCs -- Jeju Air Co., T'way Air Co. and Jin Air Co. -- are also considering cutting services on select Southeast Asian routes, according to industry watchers.

Jet fuel prices in Asia and Oceania rose 16.6 percent to US$204.95 per barrel in the week of March 13-20, compared with the previous week, and were sharply higher than the prior month's average, according to the International Air Transport Association.

- IANS

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Reader Comments

R
Rohit P
Interesting read. The flight cuts by budget airlines show how interconnected everything is. Conflict in the Middle East affects fuel prices in Asia, which then hits travel plans. Makes you think twice about booking that summer vacation abroad.
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Aditya G
A 25% cut on diesel tax is significant. This directly helps logistics and transport sectors. In India, our freight costs have skyrocketed. Some relief on excise duty would be a big help for our truckers and small businesses.
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Sarah B
While the tax cut is a good short-term measure, I hope they have a long-term plan for energy security and alternatives. Relying on volatile global markets is risky for any economy, developed or developing.
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Karthik V
The flight suspensions to places like Phu Quoc and Honolulu are a reminder that it's not just about Europe or the US. Southeast Asian tourism will also take a hit. Maybe time to explore our own incredible destinations in India this year. 🇮🇳
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Nikhil C
Respectfully, while the tax cut helps, it's a band-aid solution. It drains government revenue that could be used for infrastructure or social schemes. The extension is only till May—what happens after that if the conflict continues?

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