Amid COVID-19 Resurgence... LCCs Finding Ways to Navigate Adversity

International Flights Resumed and Cargo Business Under Review in the Aviation Industry

[Image source=Yonhap News]

[Asia Economy Reporter Yoo Je-hoon] As the novel coronavirus infection (COVID-19) shows signs of resurgence, low-cost carriers (LCCs) are once again facing difficulties. With the expected boom in domestic flights showing signs of fading, LCCs are seeking new avenues by considering cargo operations and other measures.

According to the Central Disease Control Headquarters on the 23rd, the number of new COVID-19 cases recorded at midnight was 397. This is an increase of 65 cases compared to the previous day and marks the largest scale in 169 days since the Shincheonji Church of Jesus cluster infection incident on March 7 (483 cases).

For LCCs, which did not see as much success as expected in the domestic market due to an unprecedented long rainy season lasting about 50 days in early this month, this is a troubling situation. Previously, after the large-scale suspension of international flights in March, LCCs aggressively increased domestic flight supply. Although competition over airfares escalated into a 'chicken game,' it was justified by the ability to secure liquidity. According to the Ministry of Land, Infrastructure and Transport's Aviation Information Portal, in July, domestic seat supply by Korean LCCs reached about 2.11 million seats, a 20% increase compared to about 1.75 million seats the previous year.

However, with the domestic market becoming difficult to predict due to COVID-19, LCCs' confusion is deepening. An industry insider said, "We hoped for a strong rebound in the domestic market after the rainy season ended and the holidays began, but the reality is somewhat disappointing."

Therefore, each LCC is actively seeking new opportunities. First, they are focusing on resuming international flights centered on China. For example, Air Seoul resumed its Incheon?Yantai route on the 13th, and T'way Air resumed its Daegu?Yanji route on the 20th. Although flights operate once a week, some routes have been fully booked from the start, indicating smooth progress.

At the same time, they are considering cargo operations, which had been implemented as a service measure. Jin Air, the only LCC operating the mid-sized B777-200ER, is moving fastest. Jin Air began belly cargo operations on its Taipei route in April, utilizing the entire lower deck of its B777-200ER passenger aircraft as a cargo hold. Although the B777-200ER is a passenger aircraft, its mid-sized characteristics allow it to carry about 15 tons of cargo. Considering that the main aircraft of existing LCCs, the B737-800, can carry about 5 tons of cargo, Jin Air has a relative comparative advantage.

T'way Air also announced in materials released on its 10th anniversary on the 16th that it plans to expand its cargo transport business along with resuming international flights and launching new routes in the second half of the year.

However, doubts remain about whether these efforts by LCCs to find new opportunities will succeed. The international resurgence of COVID-19 is delaying the resumption of international flights, and cargo operations also face clear limitations.

An official from a major airline said, "Major airlines have recently increased belly cargo supply by converting passenger planes into cargo planes, but compared to dedicated cargo planes, the loading capacity is insufficient, covering only fixed costs," adding, "It is questionable whether LCCs, which lack clear business know-how, can secure profits with limited cargo supply."

This content was produced with the assistance of AI translation services.