South Korea’s budget airlines are geared up to weather the sector’s downturn amid a weaker won currency and a sluggish domestic economy by attracting new customers with exclusive routes and cheaper tickets.
Domestic low-cost carriers (LCCs), including the industry leader Jeju Air Co., are expected to report weaker earnings in the fourth quarter after turning to the black in the third, sources said on Monday.
They are suffering from rising fixed costs such as fuel expenses due to the won’s depreciation and weakening travel demand due to a slowdown in Asia’s fourth-largest economy, the sources said. The won was the region’s worst-performing currency, losing 8.1% against the dollar so far this year.
“It is most important for local LCCs to seek profitable routes and attract new customers,” said one of the sources. “Such measures are expected to expand customer choice and help them operate their aircraft efficiently.”
EXCLUSIVE ROUTES
Eastar Jet Co. is scheduled to operate a route between Incheon, South Korea’s main gateway, and Tokushima, Japan, starting on Dec. 26. South Korean airlines have yet to provide passenger flights for the route.
The budget carrier, which has secured traffic rights to Kazakhstan, plans to start services to the country’s largest metropolis Almaty in the next spring.
Air Busan Co. has been operating a route between the country’s No. 2 city Busan and the Indonesian resort island Bali exclusively since late October.
The LCC unit of South Korea’s second-largest full-service carrier Asiana Airlines Inc. is set to provide exclusive non-scheduled services for the Busan-Boracay, the Philippines, route from Dec. 25 to March 1, 2025, to meet year-end holiday demand.
Air Seoul has operated the route between Incheon and Bohol, the Philippines, since July. The flight service enjoyed strong demand with a passenger load factor of over 90% in the recent four straight months.
The other budget carrier unit of Asiana decided to offer direct flights to the famous tourist destination to meet the growing vacation demand. Visitors previously had to take a boat from Cebu or a flight from Manila to the province in the Central Visayas region of the Philippines.
Jeju Air has operated flights to Bali and Batam, Indonesia, from Incheon since October through a codeshare agreement with an Indonesian low-cost carrier Lion Air. The leading South Korean budget airline has yet to secure traffic rights for the routes.
Other domestic LCCs such as Jin Air Co., the LCC subsidiary of the country’s top full-service carrier Korea Air Lines Co., and T’way Air Co. offered discounted round trip tickets of less than 100,000 won ($71.2) for flights to Japan and Southeast Asia to attract new customers.
By Jung-Eun Shin
newyearis@hankyung.com
Jongwoo Cheon edited this article.
