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What’s the best way to see the world for less?

With expanded international service,low-cost carriers offer best way to get away.

May 07,2009
The global economic downturn has people scrambling to save money while cutting corners on life’s luxuries. But that doesn’t mean people should stop traveling.

For people who want to save money and still get abroad, the solution is to book a flight on a low-cost carrier, or LCC. And the market is rushing to meet the demand by expanding both its domestic and international services.

Ever since Jeju Air started offering regular flights to Japan in March, other local carriers including Jin Air, Korean Air’s low-cost carrier, and Air Busan, Asiana Airlines’ unit carrier, have jumped on board and now plan to offer international flights.

In addition, air service industry experts say last year’s high oil prices indicate that the industry is generating competition and will eventually recover.



What are low-cost carriers?

Many airline companies offer special discounts and budget fares, but LCCs reduce their operating expenses and offer stripped down services so they can pass the savings on to passengers in the form of lower fares. As with domestic flights, reservations, ticketing, boarding, baggage and on-board procedures are all simplified for faster, more affordable service. The goal is to offer fares that are up to 30 percent cheaper than those of other carriers.



How is it different for passengers?

Most airlines take both on- and off-line reservations, but most LCCs only take online reservations, which helps the LCCs reduce the cost of training and employing so many people. In addition, many LCCs have simple fare structures and unreserved seating. On most airlines, passengers have a choice between first class and economy class seats, but the LCCs eliminate this because first class seats take up more space than economy class seats. Some European LCCs save money by refusing to make seat reservations. They have a first-come, first-served system, which encourages passengers to arrive early and get on board, reducing flight delays.



No-frills service

LCCs save money by limiting or eliminating cabin services including food and beverage service as well as other conveniences such as video entertainment and in-flight movies. Some American and European LCCs have food and drinks - for sale. Many LCCs also limit the amount of baggage passengers can check in or carry on, and will charge a fee if the baggage exceeds weight limits. This is because the planes use more fuel if the airplanes get too heavy, and this costs the airline more money.

LCCs also generally have only one kind of aircraft in their fleet, which helps them save money on the cost of maintaining equipment. Jeju Air, Korea’s first budget airline, uses both a propeller-type aircraft and a jet, but it is planning to use only jets in the near future.



Low-cost carriers expand overseas

Budget airlines are no longer limiting their flights to short hops from Seoul to Busan or Jeju Island, but have started offering routes to far flung locales in Japan and Southeast Asia. These airlines maintain their low-cost fares and no frills service, enabling passengers to go longer distances for less.

Jeju Air is the first budget carrier established in Korea and is owned by the Aekyung Group and the Jeju Provincial Government. It began operating in 2005 with the idea of offering fares that can be up to 80 percent lower than those of other carriers. In the beginning, it operated several charter flights with services in Korea and to Japan and Southeast Asia.

On March 20, it began offering regular service to two cities in Japan, and followed up by offering service to Bangkok, Thailand. Next, the airline plans to expand its international routes to include cities in Japan and Southeast Asia.

Jeju Air’s lowest round-trip ticket fare from Seoul to Osaka or Kitakyushu costs 199,000 won, excluding air tax. Meanwhile, the lowest round-trip ticket on Korean Air costs at least 320,000 won, also excluding air tax. The expansion of international service was the result of a decline in demand for domestic air service as more people began using the KTX, Korea’s bullet train, for travel within Korea. Another factor is that the air service industry is becoming less restricted. Southeast Asian countries such as Thailand are opening their skies in an effort to expand their tourism industries.



Korea’s flag carriers

Korean Air and Asiana Airlines, the nation’s flag carriers or major airlines, both have established low-cost carriers. Jin Air, Korean Air’s low-cost carrier, began operating in January 2008 and boasts “guaranteed safety.” Air Busan, Asiana Airline’s budget carrier, was established together with Busan City in 2007. It now focuses on flying domestic routes, mainly the Gimpo-Busan route, but the airline also plans to fly international routes to Japan starting next year. Even with the economic downturn continuing to affect how people and businesses spend their money, other budget carriers are following the path of Jeju Air and are pushing to expand their international services as well. Korean Air’s budget carrier Jin Air, Asiana’s Air Busan and Easter Jet all have plans to initiate international routes in the coming year.


History of savings

The world’s first low-cost carrier service started in the United States with Pacific Southwest Airlines. It was established in 1949 and 30 years later merged with USAir. It offered low-cost passenger tickets and friendly service.

There are also LCCs in Europe and in Asia. In Ireland, Ryanair was established in the early 1990s and Easy Jet in 1995. In Asia, Malaysia’s Air Asia started operating in 2002, followed by India’s Air Deccan and Australia’s Virgin Blue. The market share of low-cost carriers is increasing in the world’s air service industry. In Europe, there are some 60 low-cost carriers, which take up 11 percent of the total air service market share in Europe. The United States has some 20 low-cost carriers that take up 25 percent of the total U.S. market share.




What about safety?

The biggest concern people have about LCCs has to do with safety. People seem to think that with all the things the airlines do to save money, they must also cut corners on safety or equipment. But the airline companies say that because passengers will not be willing to travel using LCCs if their safety is not guaranteed, they have to invest as much money on safety as the major carriers do.



By Lee Seung-nyeong, Lee Eun-joo [angie@joongang.co.kr]


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