Jeju Air posts record W240.2 billion revenueJeju Air, Korea’s largest low-cost carrier, on Wednesday posted record revenue during the first quarter of the year, spurred by the company’s expansion of international routes.
The airline’s first-quarter revenue was 240.2 billion won ($213 million), a 38.7 percent increase from last year, and operating profit was 27.2 billion won, a 74.4 percent jump from last year and the best first-quarter record.
The company credits the result to its improved economy of scale from operating a single aircraft model while aggressively expanding the number of planes in its fleet. Unlike rival Jin Air, the low-cost affiliate of Korean Air, which added a larger B787-200ER Boeing model to its lineup, Jeju Air is maintaining a strategy of only offering the B737-800. The aircraft is optimized for short-haul flights and is widely used by low-cost carriers.
Jeju Air currently operates 29 B737-800 aircraft, already three more than last year, and plans to expand the number to 32 by the end of the year.
“As the company becomes a larger operator of the single model, it can save costs on maintenance per unit,” said Choi Go-woon, a research fellow at Korea Investment & Securities. “It also means the company will have bigger bargaining power when leasing a new plane.”
Jeju Air also owed its first-quarter success to strengthening its international flight service. Sales revenue from its international flight business rose 51 percent year on year to 180 billion won, according to company filings.
The result of diversifying its flight routes was reflected in the company’s first-quarter results, as sales for flights to Japan and Southeast Asia increased.
Aekyung Group, a conglomerate known more for its beauty products than air service, established Jeju Air in 2005 but recorded operating losses for about six years before posting profit in 2011.
This year, the airline aims to become the first low-cost carrier to fly more than 10 million passengers.
BY KIM JEE-HEE [email@example.com]