Kim Hyun-bin began his journalism career at Arirang TV from 2012 to 2017, specializing in defense, foreign affairs and the economy. In 2018, he joined The Korea Times, covering society and business, and is currently responsible for embassy affairs.
Open skies with ASEAN nations may benefit foreign carriers more
Singapore Airlines A350-900. Courtesy of Singapore Airlines
By Kim Hyun-bin
By Kim Hyun-bin
Korea agreed during the ASEAN-Republic of Korea Commemorative Summit to expand air traffic without limit with several southeastern countries.
The agreement will allow airlines to freely increase flight frequencies to the agreed countries as long as both airports can accommodate the increased traffic. But aviation industry watchers predict the agreement may be more beneficial to carriers of the foreign countries than Korean ones.
The Ministry of Land, Infrastructure and Transport has announced that it inked open skies agreements with Singapore and Brunei on Nov. 23 and 24, respectively.
As local airlines here have been in a slump facing continuous deficits this year due to the “Boycott Japan” movement that drastically reduced flights to the island country, they expect the open skies agreements could provide new opportunities to increase profitability.
Flights to Singapore are considered a golden route as passenger traffic to the country has surged drastically in recent years. In 2013, there were 950,000 passengers between the two countries but that number jumped 28 percent to 1.22 million last year. The load factor for the route from Incheon recorded 90 percent even during the off season.
Currently, only a handful of airlines provide flights to Singapore. Korean Air offers 18 weekly flights from Incheon, followed by Asiana with 10 flights and Jeju Air with four flights from Busan.
Air Busan is aiming to launch flights to Singapore next year from Incheon using its Airbus A321NEO that is scheduled to be brought in next year, which has a range of 7,400 kilometers.
However, there are concerns as the agreement may benefit a selected few airlines that are able to operate to Brunei and Singapore, as most low-cost carriers are unable to do so because most of their aircrafts are for short ranges unable to reach Singapore. In addition, the open skies agreement will inevitably increase competition as foreign carriers are expected to showcase lower ticket prices to compete with local airlines.
Earlier this year, Eastar Jet won flight rights to Singapore but has not been able to operate the route after it grounded its Boeing 737 MAX, the model that was responsible for two deadly crashes overseas. Jin Air is under the ministry's sanctions and unable to launch new flights.
Also, Brunei is not a popular tourist destination for Koreans yet and local airlines need more market analysis by operating charter flights to see if the destination will be able to sustain regular flights.
Korean Air has had a code-share agreement with Royal Brunei Airlines and providing service between Incheon and Brunei since September, enabling passengers to purchase code-share tickets via Korean Air's booking system for a Royal Brunei flight.
The other side to the treaty is that Singaporean and Bruneian carriers can easily enter the Korean market as well, not just increasing direct flights but also providing stopovers to third countries that are expected to lure Korean passengers with cheaper ticket prices.
From 2016 to November 2018, Singapore Airlines operated a Singapore-Incheon-LA route which gained popularity among Koreans as ticket prices were $200 to $300 cheaper than those of Korea's two full-service carriers.
“The open skies agreement will give the foreign carriers, especially Singapore Airlines, an advantage in price and more opportunities as they already operate off Incheon and Busan, which can cause harm to local airlines,” an airline official said. “On the other hand, I don't think there is a demand for local carriers to use Singapore Changi International Airport for stopovers to a third country.”