Budget airlines’ blue skies

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Budget airlines’ blue skies

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Jin Air celebrates with its 8 millionth customer at Incheon International Airport on Wednesday. Low-cost carriers have been expanding aggressively despite a sluggish economy. Last year, total of 13.06 million people flew with LCCs. Provided by the company

The popularity of low cost-carriers, or LCCs, continues to grow as consumers tighten their belts at the same time that new, affordable routes open up.

According to data from the Ministry of Land, Infrastructure and Transport, more than 3.4 million passengers used budget carriers in this first quarter, up 20.1 percent from a year ago. With threats from North Korea and the weakening yen affecting the Korean economy, some experts expected LCCs to wobble. But they continue to roar into the skies.

According to the ministry’s April data, 9 percent of all passengers boarding international flights used budget carriers. That share was up 1.9 percentage points from a year ago. Although the figure still seems low compared to the nation’s two flag carriers’ share of 66 percent, it’s a big hike from four years ago when LCCs only accounted for 0.38 percent of passengers on international flights.

For domestic flights, LCCs have expanded even more sharply. Last month, the country’s overall passenger volume for domestic flights increased to 2.02 million, an only 0.1 percent on-year increase. But the LCCs flew some 950,000 passengers in Korea, up 11 percent from a year ago. Their share of domestic flights was 47 percent, up 4.6 percentage points from a year earlier.

“I think LCCs are already stabilized in the domestic market, but the question is whether they can expand their reach overseas, which requires better service and more money,” an official from a local budget airline said. “We have five local budget carriers in this small market and since foreign low-cost carriers are coming in, competition is very fierce.”

Local LCCs said that they want to expand their flights to and from China as demand is soaring. Since Korea and China haven’t signed an open-skies accord, they are launching nonscheduled flights to rope in Chinese travelers.

Eastar Jet started operating a Jeju-Kunming route starting last Wednesday, becoming first LCC to do so. The company currently flies to 13 Chinese cities with chartered planes, the largest among local LCCs.

Jeju Air, the nation’s largest LCC, is currently operating nonscheduled air services to nine Chinese cities, while Jin Air, the LCC controlled by Korean Air Lines, said it connects to three Chinese cities and plans to add several more routes this year. Air Busan will run a Busan-Yanji route from June.

Analysts said LCCs have come up with aggressive promotions such as giving gift cards or half-priced tickets.

Korean tourists’ altered perceptions of air service was apparently one of the factors that favored LCCs. According to a recent survey from Skyscanner, an online tourism information provider that surveyed 1,000 customers, 73 percent said they were willing to pay for in-cabin meals if the ticket price was low, a business strategy most LCCs have adopted.

The services on LCCs are also starting to improve.

According to a 2012 Air Traffic Service Evaluation conducted by the Korea Transport Institute, Jin Air and Air Busan got “A” grades for domestic air service, while the others got “Bs.” For international flights, Jeju Air received the top grade.

In addition, on-time performance of LCCs was slightly better than that of flag carriers like Korean Air Lines or Asiana Airlines. According to data from Incheon International Airport Corporation, the average on-time performance of flag carriers was 84.3 percent last year. The on-time performance of LCCs was 88.8 percent, according to the data.

By Joo Kyung-don [kjoo@joongang.co.kr]
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