Budget airlines account for 50% of domestic traffic
By Lee Hyo-sik
The country’s five budget carriers ― Jeju Air, Jin Air, Air Busan, Eastar Jet and T’way Air ― have been wooing substantial numbers of customers from Korean Air and Asiana Airlines by offering lower fares and differentiated services on both domestic and international routes.
They used to offer only domestic routes but they have launched flights linking Korea with destinations in Japan, China and Southeast Asia over the past few years, providing both inbound and outbound travelers with more choices.
According to the Ministry of Land, Transport and Maritime Affairs, Monday, budget carriers handled 41.4 percent of 21.25 million domestic air travelers, or 8.8 million, in 2011. In 2010, 7.1 million passengers used low-cost carriers when traveling within the country.
The ratio jumped to 43 percent in the first three months of 2012. About 50 percent of both Korean and non-Korean passengers on domestic routes are expected to fly with low-cost carriers this year.
``Business travelers usually fly with flagship carriers because they are not price sensitive. But leisure travelers are very conscious of price so they prefer to use budget carriers,’’ a ministry official said. ``More air travelers are expected to take low-cost carriers when going to Jeju Island or Busan from Seoul or vice versa.’’
Advancing into international routes
They have also stolen large numbers of international passengers from flagship carriers and foreign airlines.
They have benefited from a surging number of Koreans heading overseas. More foreign visitors from China and other Asian nations have also helped them grow at an explosive pace.
The ministry said the number of Korean and non-Korean travelers using the five low-cost carriers reached 1.84 million in 2011, up sharply from 930,000 a year earlier. In the first quarter of 2012, 720,000 international travelers flew with budget airlines, accounting for 9.6 percent of the entire cross-border passenger traffic. The ratio is expected to exceed 10 percent this year.
Jeju Air currently operates 14 international routes to five Asian countries from airports at Incheon, Gimpo, Gimhae and Jeju. In March, it opened three new routes linking Incheon with Nagoya, Fukuoka and Ho Chi Minh. It will also fly between Incheon and Qingdao from this month.
``Our international routes are more profitable than domestic ones as we fly from late at night to early in the morning, making better use of our facilities. We then operate our fleets on local routes during the day,’’ a Jeju Air spokeswoman said.
Jin Air, a low-cost unit of Korean Air, currently operates seven international routes, including ones linking Incheon with Guam and Macao.
Air Busan, the low-cost unit of Asiana Airlines, added a Busan-Qingdao route to its flight schedule in March.
Eastar Jet has been flying between Incheon and Osaka since March, and as of May 1 is carrying those visiting Taiwan from Gimpo International Airport. T’way Air will also launch a lucrative Gimpo-Taipei service.
``What we offer our customers on international routes is not much different from those of Korean Air and Asiana Airlines. Just like in Europe and Asia, budget carriers here will soon exert greater clout over the commercial aviation market,’’ a T’way Air spokesman said.
He projected low-cost carriers will serve most air travelers flying between Korea and other Asian countries, while flagship carriers will largely cater to those going long distances, such as to Europe and America.
Facing challenge from foreign rivals
However, local budget carriers are facing increasingly stiff competition from foreign rivals rushing to establish or enlarge their presence here to take advantage of the increasing travel demand between Korea and other Asian nations.
AirAsia X, Asia’s largest budget carrier headquartered in Malaysia, was the first one to enter the Korean market. It began offering the Incheon-Kuala Lumpur route in November 2010.
Peach Aviation, Japan’s first low-cost carrier founded by All Nippon Airways (ANA), plans to operate a daily flight between Incheon and Osaka from May 8.
Low-cost carriers based in Hong Kong and Taiwan are poised to operate flights to Korea to capitalize on surging inter-regional travel demand.