Jean-Baptiste Say, the 19th-century economist, argued that "supply creates its own demand." This became known as Say's Law. However, the Great Depression of the 1930s undermined this theory. John Maynard Keynes attributed the Depression to a lack of "effective demand," and economics has since evolved to consider both supply and demand together.
Korea's airport policy still seems to embrace the notion that supply creates demand. Election-season promises of new airports illustrate this tendency. The expectation is that building airports will naturally generate aviation demand and stimulate regional economies, but reality is more complex. According to the Board of Audit and Inspection, some regional airports have runway utilization rates below 10 percent. The fact that many regional airports continue to accumulate losses in the hundreds of billions of won reveals these structural limitations.
Against this backdrop, merging airport operators has recently been discussed as a way to revitalize regional airports. The idea is that integrating Incheon International Airport Corporation, which operates Incheon Airport, with Korea Airports Corporation, which manages 14 airports nationwide, would strengthen connectivity between Incheon and regional airports while expanding new routes.
However, this approach sidesteps a fundamental question: Does sufficient demand exist? Airlines determine routes based primarily on profitability assessments. While the government can encourage route development through aviation agreements and incentives, maintaining routes without demand is difficult. Even Incheon Airport operated domestic routes to Gimhae and Daegu but discontinued them due to insufficient demand. Attempts to expand long-haul routes from regional airports have faced similar limitations.
The solution must start with demand, not supply. First, demand for regional airports must be created. Given that KTX high-speed rail exists as an alternative for domestic routes, simply expanding routes cannot secure sustainable demand. Strategies to attract new demand, such as foreign tourists, are necessary. This requires parallel efforts in developing regional tourism resources and overseas marketing. Policy incentives such as initial flight operation support, as seen in Japan, should also be considered.
Second, the supply capacity of hub airports must be leveraged. According to Airports Council International, a small number of top hub airports worldwide handle a significant share of total passenger traffic. Hub airports attract airlines and demand through network effects and economies of scale. Incheon Airport, as a global hub, possesses a network connecting major cities worldwide and sufficient capacity. It reportedly plans to utilize additional capacity from recent slot expansions to strengthen regional connectivity.
The key to revitalizing regional airports lies not in whether to merge operators but in how to efficiently connect Incheon Airport with regional airports. The government's role is clear: design economic incentives for airlines to operate regional connecting routes and establish institutional frameworks to enhance network connectivity. Merging operators alone cannot solve these problems. Forcibly combining organizations with different purposes and roles is more likely to create side effects such as decision-making inefficiencies and weakened competition. Most importantly, it could undermine the competitiveness of Incheon Airport, which competes globally, and ultimately Korea's aviation industry.
The strength of economics lies in explaining complex social issues through the simple principles of supply and demand. Airport policy is no exception. Policies that expand supply without sufficient demand are not sustainable. Discussions on revitalizing regional airports and restructuring airport operations ultimately come down to one question: Is demand ready? When we ignore this seemingly simple principle, the consequences are never small.