Low-Cost Carriers Flying Low, Will They Soar Higher This Year?

Sales of 4 LCCs Down 17% Year-on-Year Last Year
Poor Performance Due to Sharp Drop in International Flights from COVID-19
"Sales Improvement Expected This Year with Resumption of International Flights"

[Asia Economy Reporter Yoo Hyun-seok] The performance of low-cost carriers (LCCs) last year declined further compared to the previous year. The main reason cited is that profitable international passenger flights could not operate due to COVID-19.

According to the aviation industry on the 25th, the individual and separate sales of listed LCCs such as Jin Air, Jeju Air, T'way Air, and Air Busan amounted to 908.9 billion KRW last year, down 17.75% from 1.105 trillion KRW the previous year. Operating losses continued.

The biggest drop in sales was seen in Jeju Air and T'way Air. Jeju Air's sales last year were 270.8 billion KRW, down 27.59% from the previous year, and T'way Air's sales were 214.4 billion KRW, down 20.36%. Jin Air and Air Busan saw decreases of 9.94% and 7.09%, with sales of 247.2 billion KRW and 176.5 billion KRW, respectively.

The losses slightly decreased. The operating losses of the four companies last year totaled 823.1 billion KRW, compared to 848.7 billion KRW the previous year. Jeju Air posted a loss of 314.5 billion KRW, followed by T'way Air (-214.4 billion KRW), Jin Air (-185.2 billion KRW), and Air Busan (-175.2 billion KRW).

The main cause of the sales decline was the sharp drop in international passengers. Domestic air passengers last year totaled 36.36 million, a decrease of more than 70% compared to 123.37 million in 2019 before COVID-19 entered Korea. It was 7.7% lower than 39.4 million the previous year. Among these, international passengers numbered 3.21 million, down 77.5% from 14.24 million in 2020 and 96% compared to 2019. On the other hand, domestic passengers reached 33.15 million last year, an increase of 31.7% from the previous year, marking the highest number since statistics began.

From the airlines' perspective, international routes are more profitable than domestic routes. Because airfares are higher and flight distances longer, international routes are more advantageous for airlines than domestic routes. An aviation industry official explained, "In the past, 80% of airline revenue came from international routes," adding, "Consumers also prefer international flights and prices are higher, so international routes are important for airlines."

The possibility of performance improvement this year is high. With the exemption of self-quarantine for overseas arrivals, the resumption of international flights is becoming more likely. In fact, some airlines are resuming or increasing overseas routes. According to FnGuide, securities firms forecast that the consolidated sales of Jeju Air and Jin Air this year will increase by 154.18% and 142.32% compared to last year, reaching 694.1 billion KRW and 599 billion KRW, respectively.

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