Taxi 'Base Fare'-Level Cheap Airfare to Jeju

LCC, Fierce Competition for Lowest Prices in Peak Season

On the 7th, as the daily number of COVID-19 confirmed cases exceeded 1,200 and imported cases continued to rise, Korean residents, international students, and foreigners arriving from Frankfurt, Germany after vaccination lined up at the quarantine station in Terminal 1 of Incheon International Airport. On this day, for the first time since COVID-19, 10,000 people entered Incheon International Airport in a single day.
Yeongjongdo - Photo by Airport Press Corps

[Asia Economy Reporter Dongwoo Lee] As the peak summer vacation season approaches, the price war among domestic low-cost carriers (LCCs) is becoming more intense than ever.

According to the aviation industry on the 23rd, T'way Air is selling one-way afternoon tickets on the 'Gimpo~Jeju' route for 3,800 KRW (excluding fuel surcharges and other fees) on the upcoming weekend of the 24th. This is the lowest price in the industry, equivalent to the basic taxi fare in the Seoul and Gyeonggi areas.

During the same period, major domestic LCCs such as Jeju Air (4,900 KRW) and Jin Air (7,900 KRW) are also offering special Jeju-bound tickets under 10,000 KRW, igniting a fierce ultra-low-price competition for the peak season.

The industry appears to have an oversupply compared to demand as it has focused on domestic flights replacing international routes after COVID-19. According to the Ministry of Land, Infrastructure and Transport's Aviation Statistics Portal, there were a total of 3,990 flights on the Gimpo~Jeju route last month, a 21.6% increase compared to 3,280 flights in the same period last year.

Especially, the slots (number of flights per hour) on the Jeju route, which attracts a large number of passengers during the peak season this year, are being concentrated on, but concerns are growing about capturing last-minute passenger demand due to COVID-19 setbacks such as the '4th wave.'

Even if the load factor increases due to the low-price price war, it is practically difficult to generate profits. Ultra-low fares are only a temporary measure to secure immediate cash and are insufficient to improve the financial structure. The lease liabilities and short-term borrowings that LCC listed companies such as Jeju Air, Jin Air, T'way Air, and Air Busan must repay within a year amount to about 673 billion KRW.

An aviation industry official said, "As the proportion of domestic flights, including Jeju-bound routes, increases, the low-fare competition among companies is reaching its peak," adding, "Even if it means incurring losses, they are reluctantly offering fare discounts to carry one more passenger."