LCC Routes Diversify to Boost Stamina Toward Japan

[Asia Economy Reporter Hyunseok Yoo] Low-cost carriers (LCCs) that turned profitable on Japan routes are moving to the next phase of route expansion. Each airline is differentiating itself based on specialized aircraft or networks.

Last month, there were 27,206 international flights with a total of 4.61 million passengers. The number of passengers is at 58% of the level in January 2019. However, looking in detail, the increase in passengers on Japan routes is explosive. In January, the number of passengers on Japan routes was 1.33 million, an 8.3-fold increase compared to 160,000 in August last year. It also increased by 10.8% compared to January 2020, just before the outbreak of COVID-19.

The increase in passengers on Japan routes contributed to the improvement of LCC performance. Jin Air and Jeju Air, which announced their fourth-quarter results last year, turned profitable for the first time in 15 quarters thanks to the expansion of Japan routes. T'way Air continued to post operating losses but significantly reduced the loss margin.

[Image source=Yonhap News]

LCCs improving their performance through Japan routes are taking the next step. Their strategy is to restore routes such as China first, then expand routes or improve profitability in differentiated ways for each airline.

In the case of Jin Air, the plan is to maximize profits through flexible operations. Aircraft will be deployed first to destinations with high travel demand depending on the season. A Jin Air official said, "Passenger demand varies by season," adding, "We plan to operate aircraft flexibly according to this."

Jeju Air will also expand its service areas this year by introducing four Boeing B737-8 aircraft. The B737-8 to be introduced has a flight range 1,000 km longer than the B737-800 that Jeju Air currently operates. Jeju Air has signed a memorandum of understanding (MOU) with Indonesia’s primary airport operator and is preparing to develop new routes in Southeast Asia. A Jeju Air official explained, "Introducing new aircraft will increase the flight range compared to existing ones," adding, "We are considering expanding routes to Southeast Asia, including Indonesia, as well as Central Asia."

T'way Air is also planning to expand routes. The goal is to broaden service areas to countries such as Croatia and Kyrgyzstan, where they previously acquired traffic rights. The company introduced Airbus’s medium-to-large aircraft 'A330-300' last year and expanded medium- and long-haul routes to Sydney, Singapore, Mongolia, and others. A T'way Air official said, "We will expand routes reflecting customer needs and market conditions."