Low-cost carriers reap rewards of restrictions rollback

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Low-cost carriers reap rewards of restrictions rollback

Published: 09 Feb. 2023, 18:34

A passenger aircraft operated by Jeju Air [JEJU AIR]

Low-cost carriers (LCCs) enjoyed a strong fourth quarter thanks to a rising number of travelers to Japan amid lifted restrictions.

Profitability particularly started to increase in mid-October when Japan resumed visa-free entry for some international travelers after two years of strict border control.

Jeju Air swung to a net profit of 17.4 billion won ($13.8 million) in the fourth quarter compared to 53.9 billion won of net loss in the same period last year, according to its preliminary earnings report.

The turnaround follows net losses in the past 14 consecutive quarters since the second quarter of 2019.

Revenue surged 240.6 percent to 299.4 billion won in the fourth quarter. The country’s biggest low-cost carrier also swung to an operating profit of 18.72 billion won in the fourth quarter from an operating loss of 67.31 billion won a year ago.

"The company preemptively resumed flights to major Japanese cities, including Tokyo, Fukuoka, and Osaka, in October when Japan allowed visa-free travel for inbound passengers,” Jeju Air said in a statement.

“The move helped boost the bottom line," the statement said.

Jin Air also turned to an operating profit of 11.6 billion won in the fourth quarter. It is the first time in 15 quarters that the budget airline reported operating profit.

Figures for net profit have not been announced.

T’way Air will announce its earnings on Friday.

“Since November, T’way has been garnering many passengers for its routes to Japan and Southeast Asian countries,” said Park Soo-young, an analyst at Hanwha Investment Securities.

“Jeju Air and Jin Air succeeded to turn to profit in the fourth quarter, and T’way Air will likely have a similar result.”

A total of 1.16 million people traveled to Japan from Korea in December, double from October, according to data from the Ministry of Land, Infrastructure and Transport. That is the first time the figure exceeded 1 million since the pandemic.

Of all international routes, 28 percent were to Japan in December compared to 16 percent in October.

BY SARAH CHEA [chea.sarah@joongang.co.kr]