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Higher fuel surcharges weigh on airlines, travel firms
Airplanes are parked at Incheon International Airport, March 16. Yonhap
By Ko Dong-hwan
Travelers scramble to avoid price hikes
Higher fuel costs, driven by the escalating Iran crisis and a weakening Korean won, are placing financial strain on airlines and passengers, forcing carriers to raise fuel surcharges and ticket prices.
More travelers in Korea are reconsidering or canceling overseas trips as airfares rise.
A soon-to-be-married traveler who had planned to visit Spain in September recently saw her projected travel cost jump from 1.6 million won ($1,061) to 2.4 million won, prompting her to reconsider the trip.
Another traveler said a flight to Australia that was priced at 1.03 million won last month rose to 1.5 million won as of last weekend.
Naver, the country’s largest online portal and a major e-commerce platform, recently posted a notice warning that airfares could rise by as much as threefold starting in April. It advised customers to book flights by the end of this month before higher fuel surcharges take effect.
According to the notice, fares are expected to increase by up to 36,000 won for Osaka, 84,000 won for Bangkok and 196,500 won for Paris routes. The hike reflects a rise in the Mean of Platts Singapore (MOPS), a global benchmark for refined oil prices used by Korean companies, including airlines.
Travel agencies are also seeing a growing number of customers requesting early ticket issuance before April to avoid the surcharge increase.
“We are contacting customers with itineraries in April or later to ask if they would like to issue their tickets within this month so they can avoid higher fuel surcharges,” an official at Hana Tour said. “Because cancellation fees apply, many opt not to cancel their trips but instead issue tickets earlier.”
Posters for a tourism agency in Seoul promote trips to Egypt and Mount Paektu, Wednesday. Yonhap
Mode Tour is also seeing a surge in similar requests that began last week.
“The most important step is obtaining customers’ consent to issue their boarding passes in advance. Our sales offices nationwide are responding to those requests,” a company official said.
Travel agencies are concerned the situation could drag on. If it does, they face a growing risk of trip cancellations and a sharp drop in demand.
“We are worried that demand for new bookings could weaken if the crisis persists,” the official said. “Airlines notify us of fuel surcharge adjustments on the 16th of each month. If the surcharge declines next month, the impact may be short-lived. Otherwise, we are concerned about how long this situation will last.”
Rising jet fuel costs are forcing Korean low-cost carriers to scale back flight schedules to contain future expenses rather than pursue sales.
Airlines are reportedly overhauling their schedules and have asked the Ministry of Land, Infrastructure and Transport to delay the reallocation of airport slots and traffic rights previously allocated to them.
Air Busan and Aero K Airlines said they may suspend less profitable routes, including those to Guam, Cebu, Da Nang, Clark and Ulaanbaatar.
The downsizing comes as carriers are directly hit by a surge in the MOPS. Gasoline prices jumped about 80 percent in a month, from $82 per barrel on Feb. 27 to $147 on March 9, while diesel rose from $94 to $188. Korean Air, which consumes more than 30 million barrels annually, is expected to face tens of millions of dollars in additional fuel costs.