Budget carriers surpass flagship airline
LCCs outperform Korean Air in operating income
The nation’s low-cost carriers (LCCs) are flying higher than much larger and older airlines as their combined operating income is estimated to have surpassed that of industry leader Korean Air.
According to the airline industry and the transport ministry, Wednesday, six budget carriers collectively posted 186.1 billion won ($172 million) in the first quarter of the year, up 131 percent year-on-year.
Their revenue stood at 1.18 trillion won — a 34.2 percent increase from a year ago.
The LCCs are Jeju Air, Jin Air, Air Busan, Air Seoul, Eastar Jet and T’way Air.
Their operating income is slightly more than that of Korean Air which saw a 4.3 percent decrease to 177 billion won during the same period.
Their performance carries extra weight as the low-cost airlines are still struggling to fully recover demand on their routes to China due to the Chinese government’s economic retaliation against Korea for its deployment of a U.S. missile defense system, the Terminal High Altitude Area Defense (THAAD).
“The LCCs strived to diversify their routes to Southeast Asia and Japan to contain the fallout from China, which paid off,” said an airline industry official.
In addition, the Korean won has been strengthening against the U.S. dollar helping reduce their foreign debts from airplane-leasing deals, according to the market.
However, lingering challenges such as rising oil prices and China’s anti-Korean sentiment are expected to once again post threats to the LCCs in the following quarter.
Jeju Air, the No. 1 budget airline, chalked up a record operating profit of 46.4 billion won in the January-to-March period on a 71 percent spike in demand year-on-year and its sales registered growth of 29 percent at 308.6 billion won — the first time a local LCC has topped 300 billion won in sales.
Jin Air, an LCC affiliate of Korean Air, also put in a strong performance as its first-quarter operating profit and revenue advanced by 55.8 percent and 20.3 percent, respectively, to 53.1 billion won and 280 billion won.
Despite taking a backseat to the LCCs’ financial records, the nation’s two full-service carriers also delivered solid performances.
Their combined operating profit for the first quarter stood at 241.1 billion won, up 14.2 percent from the same period last year, with their revenue totaling 4.62 trillion won.
Asiana Airlines saw its first-quarter operating income surge 145 percent year-on-year to 64.3 billion won, with sales rising 10 percent to 1.6 trillion won.
As for Korean Air, its revenue increased by 7.4 percent to 3.02 trillion won against a 4.3 percent fall in operating profit.
Jeju Air commissions new plane
Korea’s leading low-cost carrier Jeju Air has commissioned its 34th plane after adding three more planes to its commercial fleet this year.
The new planes are Boeing B737-800s, the same as the airline’s existing planes, the company said.
It has been maintaining a single type plane policy in order to keep offering low-cost services.
The budget airline is aiming to operate 39 planes by the end of the year, and is further planning to commission nine more airplanes.
It will return one of its fleet to Boeing as its lease is ending.
With the additional planes, the company’s overseas route expansion is expected to accelerate.
Last month, the company said it is planning to help Muan International Airport become a hub airport similar to Incheon and Gimhae international airports.
To this end, the company commenced services from from Muan to Osaka, Da Nang and Bankok between April 30 and May 2.