Local low-cost carriers (LCC) are deeply concerned despite a rise in international passenger demand, as the competition for Southeast Asian routes is intensifying due to difficulties entering the most popular destinations ― Japan and China. Many experts believe it will be difficult for LCCs to improve their financial structure despite a surge in international flight demand.
According to the Ministry of Land, Infrastructure, and Transport Monday, the number of international passengers at national airports in July was recorded at 1,855,000, an increase of 532 percent from the previous year.
By route, the recovery of international passengers was fastest for flights bound for the Americas. Compared to the 2019 average, the Americas recovered 74 percent, Europe 41 percent and Southeast Asia 35 percent but Japan and China only saw a recovery of 7 percent and 2 percent, respectively.
Among the three major LCCs, Jeju Air was top with 97,392 international passengers, followed by Jin Air with 95,784 and T'way Air with 85,560.
Compared to the previous month, the three airlines all showed significant improvement in passenger transport performance but the situation is not all optimistic as it is unknown when the airways for Japan and China ― which were the main international routes for Korean LCCs ― will reopen.
"The recovery of passenger demand on the main short-distance routes, such as Japan and China, is still slow," Jeong Yeon-seung, a researcher at NH Investment & Securities said.
In order to enter Japan for tourism purposes, a visa is required, and the process takes two to three weeks. In addition, the number of foreign arrivals per day is limited to 20,000 which includes both domestic and foreign residents, while only group tours are allowed. China is also strictly restricting international flights because of its zero-COVID policy.
Japan was the most visited overseas travel destination by Koreans from 2001 to 2018. For LCCs, 80 percent of sales came from international routes, and among them, Japanese routes accounted for 55 percent.
In addition, most of the passenger demand that increased in July is concentrated on large airlines. The international flight market share was 43 percent for Korean Air and Asiana Airlines, 38 percent for foreign airlines, and 19 percent for LCCs. Considering that the LCCs' share was 31 percent in July 2019, before the pandemic, the proportion of international passengers using LCCs has dropped significantly.
