Low-cost carriers soar, but concerns about safety remain

Low-cost carriers (LCC) are starting to rapidly expand in both domestic and international service thanks to their cheaper flights and flexible pricing structure that allows for customized service, but concerns about safety still plague the industry.

On Monday morning at Gimpo International Airport, an A321 jetliner bearing the logo of Air Seoul was ready to take off. It was the company’s first flight bound for Jeju, carrying 160 passengers.

Air Seoul is the second such company to be established by Asiana Airlines after Air Busan. With the company in full-scale operation, there are now six LCCs in the market, including Jeju Air, Jin Air, T’way Air, Eastar Jet and Air Busan.

“We had a terrific start by securing 90 percent reservations for July,” Air Seoul CEO Ryu Kwang-hee said. “We will drive this momentum by building a safety flight system and branch out to international flights by October.“

Budget carriers are making headway in the market. Up until May, the market share of these companies for domestic flights was 56.1 percent, more than full-service carriers like Korean Air and Asiana Airlines.

According to the Korea Airports Corporation and Incheon International Airport Corporation, the total number of passengers using LCCs in the past 11 years has reached more than 100 million.

A similar trend is taking place for international flights. The market share of budget carriers increased by 40.4 percent this year compared to last year’s 17.5 percent jump, and LCCs’ market share in China, Japan and Southeast Asia border on a whopping 50 percent.

Though comparatively smaller, the LCCs make up for their size by aggressively expanding where traditional big carriers have lost their footing due to worsening profitability, such as in the regional cities of Busan, Daegu and Cheongju in North Chungcheong.

A more recent strategy has been to upgrade service quality by offering in-flight meals and seat reservation systems and building airport lounges. Passengers can now opt for “special offers,” paying only for services they want, unlike at larger airlines.

Korean Air and Asiana Airlines plan to counter the expansion of LCCs by gradually purchasing some 150 cost-effective aircraft by 2025. These planes have more seat space and require 20 percent less fuel.

“Usually, optional services such as in-flight meals and seat reservation account for less than 10 percent of total sales,” a Jeju Air spokesperson said. “But for global LCCs, these services account for 30 percent of total sales, which indicates a lot more potential.”

Some critics say the second-tier carriers are too focused on generating profit by churning out various kinds of fees and charges. They argue LCCs should concentrate on developing more systematic safety measures, especially after a recent spate of flight accidents.

“Korea’s LCCs should learn from the case of expansionary bigger players that have lost potential,” said Hurr Hee-young, a professor at Korea Aerospace University. “The domestic market environment could turn much worse for them if Chinese LCCs start jumping to Korea armed with price incentives.”

BY KIM KI-HWAN [lee.dongeun@joongang.co.kr]