Lee Min-hyung joined The Korea Times in 2014 and has worked as a journalist mainly in Korea’s finance, tech and automotive industry. He specializes in content creation, breaking news and in-depth analysis currently on transportation and mobility. You can reach him via mhlee@koreatimes.co.kr.
Airlines forced to reshape strategies as global oil prices soar
A Korean Air passenger jet takes off from Incheon International Airport in this undated photo. Courtesy of Korean Air
By Lee Min-hyung
Strengthening dollar expected to weaken travel demand
Local airlines are being pushed to overhaul their business strategies, as the prolonged surge in global oil prices poses an increasing financial burden to both major airlines and low-cost carriers (LCCs), industry officials said Tuesday.
According to a business report released by Korean Air, the airline spent 4.16 trillion won ($2.78 billion) on fuel last year, accounting for 28 percent of its total spending of 14.96 trillion won. With global oil prices rising sharply this year, the carrier is expected to face significantly higher fuel costs for 2026.
Korean Air consumes some 30.5 million barrels each year, meaning the carrier faces an increased fuel cost of $30.5 million if the oil price increases by $1 per barrel.
“Korean Air is tightening its vigilance on the volatile oil price and hedging fuel costs by using financial derivatives,” a Korean Air official said.
Geopolitical risks have also disrupted part of the firm’s operations. Following heightened tensions in the Middle East, Korean Air suspended its Incheon-Dubai route through April 19. The airline had previously operated daily round-trip flights on the route, but has canceled all Dubai-bound services since Feb. 28, the start of armed conflict in the Middle East.
Budget carriers are also scrambling to respond to the fuel cost pressure.
Jeju Air said it plans to ease the growing fuel burden by accelerating fleet modernization and introducing more fuel-efficient aircraft.
The airline recently introduced the next-generation B737-8, signaling a faster transition for improved operational efficiency.
Last week, T’way Air entered an emergency management mode. The company said it will minimize spending across the organization and cut unnecessary costs to cushion the impact of the fuel price shock.
A Jeju Air passenger jet / Courtesy of Jeju Air
The carrier added that the move is a preemptive response to growing external uncertainties, including volatile exchange rates and fluctuating oil prices.
Jin Air is taking a different approach, seeking to stimulate demand through network expansion. The airline is striving to boost passenger numbers by launching new routes, such as Busan-Miyakojima and Busan-Taichung, starting later this month. However, industry observers said that such efforts may have limited impact.
They said fuel costs typically account for around 30 percent of total expenses for LCCs, making them particularly sensitive to sustained increases in oil prices. The simultaneous rise in the won-dollar exchange rate has compounded the pressure, dealing a double blow to the budget carriers.
“The double whammy of high oil prices and the stronger dollar is inflicting significant damages on LCCs, as fuel expenses make up a substantial portion in their annual spending,” an industry official said. “In particular, a weakening consumer sentiment — caused by the increasing won-dollar exchange rate — could directly dampen travel demand.”