Korea’s LCCs to counter headwinds with exclusive routes, lower fares

South Korea’s budget airlines are gearing up to weather the sector’s downturn amid a weaker local currency and a sluggish domestic economy by luring customers with cheaper tickets and exclusive routes.

Domestic low-cost carriers (LCCs), including industry leader Jeju Air Co., are expected to report weaker earnings in the fourth quarter after turning to the black in the third, sources said on Monday.

They are suffering from rising fixed costs such as fuel expenses due to the Korean won's depreciation and weakening travel demand due to a slowdown in Asia’s fourth-largest economy, the sources said. The won has been the region’s worst-performing currency so far this year, losing 8.1% against the US dollar.

“It is most important for local LCCs to seek profitable routes and attract new customers,” said a source. “Such measures are expected to expand customer choice and help them operate their aircraft efficiently.”

EXCLUSIVE ROUTES

Eastar Jet Co. is scheduled to operate a route between Incheon, Korea’s main gateway, and Tokushima, Japan, starting on Dec. 26. Up to now, Korean carriers have not provided passenger flights for the route.

The budget carrier, which has secured traffic rights to Kazakhstan, also plans to launch flights to the Central Asian country’s largest city Almaty next spring.

Air Busan Co. has been operating an exclusive route between Korea's No. 2 city Busan and the Indonesian resort island of Bali since late October.

Air Busan, the LCC unit of Korea’s second-largest full-service carrier Asiana Airlines Inc., is also set to provide exclusive non-scheduled services for the Busan-Boracay, Philippines, route from Dec. 25 to March 1, 2025, to meet year-end holiday demand.

Meanwhile, Air Seoul has operated a route between Incheon and the Philippine island of Bohol since July. The route has enjoyed strong demand with a passenger load of over 90% over the past four months.

Air Seoul, the second LCC unit of Asiana, decided to offer direct flights to the tourist destination to meet growing vacation demand. Visitors previously had to take a ferry from Cebu or a flight from Manila to reach the island province in the Philippines' Central Visayas region.

Jeju Air has operated flights from Incheon to Bali and Batam, Indonesia, since October through a codeshare agreement with Indonesian budget airline Lion Air. The leading Korean budget carrier has yet to secure traffic rights for those routes, however. 

Other domestic LCCs such as Jin Air Co., the budget subsidiary of the country’s top full-service carrier Korean Air Lines Co., and T'way Air Co. have offered discounted round-trip tickets for less than 100,000 won ($71) for flights to Japan and Southeast Asia to attract new customers.

Write to Jung-Eun Shin at newyearis@hankyung.com
 
Jongwoo Cheon edited this article.