Korean budget airlines recover back to pre-pandemic levels

[Courtesy of Jeju Air]

Major budget carriers in South Korea have shown signs of a remarkable recovery in their performance to levels seen before the Covid-19 pandemic, primarily through diversifying their short to mid-range route strategies. The resurgence comes alongside a reduction in fuel prices and the won/dollar exchange rate, alleviating cost burden for airline operators.

According to Jeju Air on Monday, the airline recorded 4,196 international flights with about 680,000 passengers in October, marking a 219 percent and 232 percent increase respectively compared to a year ago. These figures nearly mirror the carrier’s performance in October 2019, before the onset of the Covid-19 pandemic. But in comparison, international flights in October 2023 nearly doubled, while passenger numbers surged by 103 percent. When the easing of pandemic restrictions began to ease in October 2022, Jeju Air operated 1,312 flights internationally, carrying only 200,000 passengers.

Jeju Air attributed this recovery in short to mid-range route operations, predating the pandemic, to its focused efforts. Starting with the resumption of routes such as Gimpo to Osaka and Incheon to Sapporo in October 2022, followed by the launch of flights from Incheon to Nagoya and Okinawa a month later, the carrier swiftly increased its service on Korea-Japan routes. Among the national flag carriers flying to Japan from January to October 2023, which served around 13.97 million passengers, Jeju Air transported 2.9 million passengers, accounting for 20.8 percent and securing the biggest share of the market.

Other low-cost carriers (LCCs) also embarked on a rapid recovery trajectory by diversifying their short to mid-range routes. These companies achieved record-breaking performances during the summer vacation season and the Chuseok holiday, the first peak seasons since the end of the pandemic. Besides Jeju Air, major LCCs such as Jin Air and T’way Air also exhibited improved operational performances in October 2023, nearing those pre-pandemic levels.

While concerns arose about a potential sharp decline in passenger demand in the fourth quarter due to fluctuations in oil prices and the strong U.S. dollar, analysis suggests that these worries might have peaked. Soaring aviation fuel prices, which hit a yearly high of $123 per ton at the end of last month, have declined to around $118 per ton this month and the exchange rate of the dollar to the Korean won has recently hovered around the 1,200-won mark, further easing the financial pressure on airlines.

The LCC industry anticipates a continued improvement in performance during the fourth quarter. According to industry sources, last month’s international passenger traffic reached about 6.62 million, up 11.2 percent increase versus the previous month, nearly aligning with the passenger volume recorded during the peak travel month of August, or 6.68 million passengers.