Questions linger over Jeju Air’s fare hike

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Questions linger over Jeju Air’s fare hike


Jeju Airline said Thursday it will set its domestic fares at 80 percent of those charged by local full-service carriers starting Oct. 4. Provided by the company

Jeju Airline, Korea’s largest low-cost carrier (LCC) in terms of sales, stated on Thursday that the company will set its domestic fares at 80 percent of the rate charged by local full-service carriers from Oct. 4.

For most people who heard this news, it was almost impossible to find out whether the budget carrier, owned by Aekyung Group, was raising its domestic fares or not. Saying its domestic fares will be set at a certain percentage of Korean Air’s or Asiana Airlines’ ticket prices is an unclear move to the average traveler.

The truth is that the price of Jeju Air’s domestic flights will in fact go up. This is because the nation’s top two full-service carriers - Korean Air and Asiana Airlines - have already increased their domestic fares in July and August, respectively.

Under the new fare system, the ticket price of the Gimpo-Jeju route will be 65,600 won ($59) on weekdays, up 11.56 percent from the previous rate of 58,800 won. On weekends, the airline will require passengers to pay 76,000 won, which is 9,400 won or 12.4 percent higher than the old fare.

Overall, Jeju Air increased its domestic fares an average of 12.8 percent, higher than Korean Air’s or Asiana Airlines’ domestic fare hike of 9.9 percent.

Its increased rate is also higher than spikes by fellow LCCs. Eastar Jet, which was the first local LCC to announce a domestic fare hike, had an average of a 5 percent raise, while Air Busan’s domestic tickets have become expensive - a 9.7 percent hike on average, beginning this month.

But what’s disturbing is that Jeju Air never used the words “raise” or “hike,” but kept saying “arrangement” when distributing this information through press releases.

Some people might look this as a cunning marketing strategy, but for others, it could be seen as a cover up.

Furthermore, questions remain over whether the decision of raising domestic fares was done under the proper processes.

Under the written agreement between Jeju Air and the Jeju provincial government, the two sides must consult each other and reach an agreement on changing the fare system. The government holds a 5 percent stake in the airline.

However, according to local media reports, it turns out that the two sides did not reach an agreement on the domestic fare hike. The Jeju government is reportedly considering filing a lawsuit to nullify the deal.

The domestic fare raise of local LCCs was somewhat expected news as they had already shown their intention of increasing fares earlier this summer, saying that they need to deal with rising costs and unfavorable market conditions.

But industry experts have warned local LCCs that they haven’t concentrated much on the basics, such as trimming unnecessary costs to lower prices and enhancing customer service, while focusing too much on marketing and special promotions.

With a large amount of cash from Aekyung Group, Jeju Air has been one of the main culprits, using K-pop group Big Bang as its front model.

The path of Jeju Air has been successful and aggressive compared to fellow LCCs like Eastar and T’way Airlines. But with recent fare hikes, consumers have been complaining that they find no advantages in LCCs anymore.

by Joo Kyung-don []

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