Low-cost carriers soaring

Budget airlines take up nearly one third of market

By Lee Hyo-sik

Low-cost carriers are thriving on a surge in the number of Korean and foreign passengers.

When low-cost airlines first began flying in the mid-2000s, they served mostly local travelers flying on domestic routes. But they have expanded their reach outside the country, taking many passengers away from the nation’s two flagship carriers: Korean Air and Asiana Airlines.

The six budget carriers — Jeju Air, Jin Air, Air Busan, T’way Air, Eastar Jet and Air Seoul — will likely continue to increase their clout this year by adding more planes to their fleets and launching new international routes.

According to the Ministry of Land, Infrastructure and Transport, the eight domestic airlines handled a combined 47.2 million passengers flying overseas in 2016.

Of these, the low-cost carriers accounted for 14.3 million, or 30.3 percent, up from 22.7 percent in 2015 and 18.3 percent in 2014. On domestic routes, budget airlines accounted for 57.4 percent by transporting 17.63 million travelers.

The ministry said budget carriers bolstered their passenger capacity by operating more aircraft and flying to more overseas destinations.

Air Seoul, Asiana’s second low-cost airline launched last July, also helped expand the low-cost carrier market.

By company, Jeju Air handled 4.12 million international passengers, followed by Jin Air (3.74 million), Air Busan (2.21 million), Eastar Jet (2.07 million), T’way Air (2.02 million) and Air Seoul (117,000).

“Budget carriers now handle nearly 60 percent of domestic route passengers and have expanded their presence abroad by launching flights linking Korea with destinations in Japan, China and Southeast Asia, providing both inbound and outbound travelers with more choices,” a ministry official said.

They 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 flights, the official said, adding that they will play a larger role in Koreacommercial aviation market.

In contrast to Korean Air and Asiana Airlines, which have largely remained reluctant to increase the size of their fleets on increasing operating costs, budget carriers have been rushing to introduce new planes.

Jeju Air said it will continue to expand its operations in 2017 to become Asia’s leading carrier. The airline currently operates 27 planes on 30 international routes from airports at Incheon, Gimpo, Gimhae and Jeju.

This year, the company plans to add five more planes, including the Boeing 737-800 and Airbus 321-200, and service more than 10 million passengers.

“We have achieved economies of scale in our international operations, meaning that we can fly to many overseas destinations in a cost-effective manner,” a Jeju Air spokesman said.

“We will continue to do what we have been doing over the past few years. We will introduce new planes and launch more international routes, as well as offering differentiated travel experiences for our customers.”

Jin Air, Korean Air’s low-cost unit, also plans to add four more planes to its fleet in 2017.

“We haven’t been able to finalize our business plan yet for this year,” a spokesman said. “Unlike Jeju Air, we will focus more on bolstering our bottom line than expanding our size.”

Air Busan, affiliated with Asiana Airlines, also said it will not fly to new foreign destinations in 2017.

“Instead, we will seek to expand the number of flights on our exiting 30 international routes to bolster profitability. Launching new routes incurs substantial costs,” a company spokesman said. Air Busan runs a fleet of 18 planes, flying to 22 foreign destinations, and plans to introduce four more aircraft this year.

T’way Air also plans to buy four new planes this year, expanding its fleet to 20, while Air Seoul, which operates three planes, is expected to add two more.