Budget Carriers to Overtake Big Airlines on Long-Haul Flights
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Budget airlines are taking a growing share of Korea's passenger flight market even on long-haul routes, where they could soon outstrip established flag carriers.
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According to the Ministry of Land, Infrastructure and Transport, low-cost airlines accounted for 13.2 percent of the international flight market here in the first quarter of 2015 but that more than doubled to 32.2 percent in the first quarter of this year. Korea has six budget carriers -- Jeju Air, Jin Air, T'way Air, Air Busan, Eastar Jet and Air Seoul.
Over the same period, flag carriers Korean Air and Asiana Airlines saw their share fall from 49.2 percent to 36.6 percent. Now the gap stands at just 4.4 percentage points.
The six budget carriers transported 6.32 million passengers on international flights in the first three months of this year, up a whopping 17.2 percent on-year.
Korean Air and Asiana transported 8.41 million passengers, down 1.5 percent over the same period.
Passenger numbers on flights to North America and Oceania, which are dominated by flag carriers, declined, while numbers soared on shorter-haul flights to China and Southeast Asia, which budget carriers are focusing on. Budget airlines are expanding flights on long-haul routes like Hawaii.
"As Koreans travel more, they are opting to endure a few inconveniences to travel cheap rather than splurging on airfares", a staffer with a low-cost airline said.
On domestic routes, budget carriers already have the lion's share with 58.2 percent.
Low-cost airlines achieved an average operating profit margin of 13 percent in the first quarter, more than double the 5.7 percent of 573 companies listed on the Korea Exchange and three times better than Korean Air's 4.8 percent and Asiana's 4.1 percent.