Although Struggling Last Year... LCCs Recover by Expanding Air Routes

[Asia Economy Reporter Yoo Hyun-seok] Last year, low-cost carriers (LCCs) that posted poor performance are expanding their flight routes in line with the exemption from self-quarantine, aiming to improve their results.

According to the aviation industry on the 27th, 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 were 214.4 billion KRW, down 20.36%. Jin Air and Air Busan recorded 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 loss of the four companies last year was 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. Last year, domestic air passengers numbered 36.36 million, which is more than 70% less than the 123.37 million in 2019 before COVID-19 entered Korea. It is 7.7% less than the 39.4 million in the previous year. Among them, international passengers were 3.21 million, a 77.5% decrease compared to 14.24 million in 2020 and a 96% drop compared to 2019. On the other hand, domestic passengers recorded 33.15 million last year, an increase of 31.7% from the previous year, the highest number since statistics began.

However, with the exemption of self-quarantine for overseas arrivals, airlines are resuming flights. Since the 21st, the government has exempted vaccinated overseas arrivals from the 7-day quarantine after entry.

With the self-quarantine exemption, airlines are actively increasing routes to Saipan and Guam. Air Seoul will launch a new Incheon-Saipan route twice a week starting on the 30th. Jeju Air will resume the Busan-Saipan route twice a week from the 30th. Air Busan has been operating the Busan-Saipan route since the 16th and will operate the Busan-Guam route twice a week from the 30th. Jin Air plans to operate the Busan-Guam route twice a week starting from the 16th of next month.

The possibility of performance improvement this year is high. The exemption from self-quarantine for overseas arrivals increases the likelihood of resuming international flights. 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 be 694.1 billion KRW and 599 billion KRW, respectively, an increase of 154.18% and 142.32% compared to the previous year.

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