Group Discounts, Super Special Prices, Sightseeing Flights... LCC's 'Survival Marketing'

Concerns Over Intensifying 'Chulhyeol Competition'

On the 8th, when the special entry procedures for Korean and Japanese businesspeople were implemented, passengers at Incheon International Airport Terminal 2 were undergoing departure procedures for the flight to Narita, Tokyo, Japan. Photo by Mun Ho-nam munonam@

[Asia Economy Reporter Yu Je-hoon] Domestic low-cost carriers (LCCs), facing extreme demand contraction due to the novel coronavirus disease (COVID-19) crisis, are actively establishing marketing strategies for survival.

According to the industry on the 3rd, Air Busan will introduce a "Group Discount Program" for private group gatherings of 10 or more people starting today. This is the first time a national airline has introduced such a group discount program. Through this group discount, Air Busan will provide up to 5 free tickets each time a group of 15 or more uses the flight, and will grant additional free tickets based on cumulative usage over the next year. In addition, additional free checked baggage, international lounge access (for international flights), and dedicated staff assignment (for groups of 40 or more) will also be provided as additional services.

Products for "sightseeing flights" (so-called destination-less flights), which previous LCCs did not consider, have recently been launched one after another. Jeju Air and Air Busan have already operated sightseeing flights, and other LCCs are likely to competitively release related products in the future if profitable in-flight duty-free sales are allowed only for international sightseeing flights.

Super-discount promotions continue as well. Although such promotions have been conducted in previous years due to the LCC business model, it is noteworthy that recently the unit price has dropped below just 10,000 KRW. In fact, Jin Air sold domestic (Busan~Jeju) one-way tickets starting from a total fare of 7,200 KRW last month.

The reason LCCs are adopting various marketing strategies like this is to attract domestic demand, which has become the only lifeline due to COVID-19. As of September, the domestic passenger decline rate was about 28%, whereas the international passenger decline rate reached 97%, forcing LCCs to focus on domestic operations.

However, there are concerns that such marketing could intensify cutthroat competition in the domestic market. A representative of a national airline said, "Unlike neighboring countries with wide territories or long stretches, the domestic air market has clear demand limits," adding, "At present, domestic flights are being maintained even to cover fixed costs rather than profitability, but it is questionable how long this business model can continue."

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