By Lee Hyo-sik
Korean Air and Asiana Airlines, the nation’s two dominant carriers, are apparently losing their share of the air passenger market to foreign carriers and low-cost airlines armed with lower fares on diverse international routes.
Jeju Air and four other budget carriers used to offer only domestic routes. But they have begun operating flights linking Korea with destinations in Japan, China and Southeast Asian countries over the past few years, providing outbound travelers with more means of transportation.
They have been able to steal substantial numbers of customers from Korean Air and Asiana Airlines by offering lower airfares.
Additionally, Singapore Airlines, Cathay Pacific Airways and other foreign carriers have presented Korean travelers alternative ways of traveling to foreign destinations at cheaper prices. They sell tickets at discounted prices through a range of promotional events, emerging as a viable threat to the country’s two largest airline companies.
In response, Korean Air and Asiana Airlines have decided not to engage in the cutthroat price cutting competition but instead to offer travelers premium services and pleasant flights unrivaled by those of non-Korean airlines and low-cost carriers.
The intensifying competition is expected to benefit travelers because companies are forced to cut fares and improve customer services to remain in business.
To fend off growing competition from rivals, Korean Air has adopted a marketing strategy to offer customers premium services both on the ground and in the air.
It will put its first A380 aircraft, dubbed “flying hotels in the sky,” into operation in June and add nine more to its fleet by 2014, providing unrivaled in-flight services.
The airline plans to create a total of 407 seats — 12 first-class, 94 business-class and 301 economy-class seats — the fewest among airline companies that operate the A380.
“Our A380 aircraft will be the most spacious and comfortable for air passengers. We will first operate the A380 linking some of our busiest short-distance routes, linking Incheon with Hong Kong and Bangkok. The airplane will then be mobilized to transport travelers to and from New York, Los Angeles and other cities in North America and Europe,” a Korean Air spokesman said.
Korean Air expects the number of outbound travelers to increase by up to 15 percent in 2011 from last year, reaching nearly 13 million. Additionally, more foreigners will likely visit Asia’s fourth largest economy this year, with the Korean Tourism Organization putting the 2011 figure at 10 million.
“To capitalize on surging air travel demand, we will fully mobilize our resources this year. Not only A380s, but also Boeing’s 777s and 747-8Fs will be introduced to our fleet. We will not engage in a price-cutting campaign like budget airlines. We will continue to work hard to reinforce our reputation as one of the world’s leading premium flight service provider,” the spokesman said.
He also said Korean Air will more actively promote Incheon International Airport as a Northeast Asian hub to attract more foreign passengers to transfer at the airport via its flights.
Its archrival Asiana Airlines also said it will focus on providing differentiated customer services from non-Korean airlines and low-cost carriers.
On Jan. 6, the airline announced a plan to add a total of six A380 airplanes to its fleet between 2014 and 2017 at a cost of 2.04 trillion won. The company has also signed a contract with Airbus to buy a total of 30 A350 airplanes, which will be delivered from 2016. “We will continue to upgrade our fleet to improve in-flight services. We have more conveniently-scheduled diverse international routes, compared to those offered by budget carriers. Asiana will strengthen its core competitiveness through premium service strategy,” an Asiana Airline spokesman said.
With more Koreans heading abroad this year, many non-Korean airline firms have launched more aggressive marketing campaigns to expand their customer base here.
Among others, Cathay Pacific Airways is offering airtel packages (airplane and hotel) for Koreans traveling to Hong Kong during the upcoming Lunar New Year holiday between Feb. 2 and 6, and Valentine’s Day on Feb. 14 and White Day on March 14.
Packages for those planning a trip to Hong Kong during the six-day holiday provide round trip tickets, a hotel stay as well as fringe benefits, and are specially prepared for those who want to enjoy a romantic winter holiday through various events and festivals in the port city.
“Hong Kong Romantic Packages” are specially designed for couples seeking a romantic getaway from everyday life on Valentine’s Day and White Day.
“Through these kinds of all-year-round promotional events, we will improve Cathay Pacific’s premium brand image among leisure travelers. We will also promote ourselves as the most preferred airline flying to Hong Kong among business travelers here,” said a spokeswoman at Cathay Pacific’s Korean branch office.
She said the airline will publicize its convenient schedule of 5 daily flights from Incheon to Hong Kong, and endorse its renowned, sophisticated premium ground and in-flight services.
Its regional rival Singapore Airlines has also stepped up its effort to secure more Koreans customers.
“We will continue to develop hybrid packages that provide leisure travelers with airfares, hotels, dining and entertainment needs at discounted prices,” said a spokeswoman at the airline’s sales office here.
The company offers not only discounted airfares, but also premium in-flight services, she said, stressing that the quality of its service is as good as that of Korea’s flagship carriers.
Etihad Airways, the United Arab Emirates’ flagship carrier, has unveiled an ambitious plan to emerge as the most popular Arab-based airline among Korean customers, outpacing Qatar Airways and Emirates Airlines. Ethihad just launched a direct flight between Incheon and Abu Dhabi on Dec. 11, 2010.
“We offer a great flight option to Korean business travelers heading to the rapidly growing Middle East. We reflect the best of Arabian hospitality and enhance the prestige of Abu Dhabi as a center of hospitality between East and West,” said a spokeswoman at Etihad’s Korean office.
The country’s five local low-cost carriers are poised to make another leap forward in 2011, encouraged by their strong performance last year. They will likely make more efforts to attract customers by cutting airfares for international routes linking Korea with Japan, China and Southeast Asia.
Jeju Air, Korea’s largest low-cost air carrier is targeting sales of 211 billion won this year, up 34 percent from last year, and an operating profit of 7.5 billion won. “We would like to post a surplus this year by attracting more travelers for our domestic and international routes. To do so, we will make an all-out effort to establish a brand image that we provide a reliable and high-quality flight services at low prices,” a Jeju Air spokesman said.
He also said the airline will organize a series of promotional events to establish its status as a leader in Korea’s low-cost carrier market.
Its recent promotional event in which the sale of 10,000-won one-way ticket to Jeju Island from Seoul and other cities drew an enthusiastic response from travelers. A total of 5,272 were sold within hours, substantially more than the initially planned 3,600 seats.
The airline currently operates three domestic routes connecting Seoul and two other cities on the mainland with Jeju Island. It also operates flights between Incheon and other local airports, and destinations in Japan and Southeast Asia.
Air Busan plans to launch an international route between Busan and Taipei in the near future, with Eastar Jet, T’way Air and Jin Air all preparing to expand its flight services overseas in a bid to capitalize on the growing number of outbound travelers.