The deadline for the tariff exemption on aircraft parts, which was set to expire last year, has been extended to the end of this year, confirming that domestic airlines have retroactively received hundreds of millions of won in tariff reductions this year. The aviation industry argues that a permanent exemption from tariff on parts is necessary to enhance the competitiveness of the Maintenance, Repair, and Overhaul (MRO) industry. On the other hand, concerns have been raised that tariff exemptions represent preferential treatment for specific industries.
According to the Korea Aerospace Industries Association on the 30th, the total amount of import tariffs exempted for aircraft parts received by Korean Air, Asiana Airlines, Jeju Air, and T'way Air last year exceeded 100 billion won (including The Special Tax for Rural Development). The exemption amount for 2023 is approximately 91 billion won.
Korea, which lacks aircraft manufacturers, relies heavily on imports for most of its parts. The dependence on overseas maintenance for aircraft stands at an average of 56%, but the dependence on overseas maintenance for parts rises to 88%. The government is working to enhance the competitiveness of the MRO industry, but the aviation sector insists that price competitiveness is also necessary.
Major foreign airlines, such as those from the United States, the EU, Japan, and Singapore, import maintenance parts for aircraft duty-free by joining the Trade Agreement for Civil Aircraft (TCA) or through domestic tariff exemption regulations. Korea's tariffs were initially fully exempted but were set to increase annually by 20 percentage points (P), starting at 20% this year. However, a partial amendment to the tariff law proposed by Rep. Park Soo-young of the People Power Party passed the legal committee in February and was promulgated on March 14, extending the tariff reduction benefits until the end of this year.
Some voices argue that this constitutes preferential treatment for the aviation industry. An anonymous source stated, "The exemption from tariff on parts is preferential treatment for certain large corporations and was scheduled to expire. The merger of Korean Air and Asiana Airlines must also be taken into consideration in the aviation sector."
A representative from the Ministry of Economy and Finance said, "For now, it has been extended for one year. It is difficult to predict how it will be next year, and we are closely reviewing with the tariff authority."