As Budget Carriers Multiply, Prices Fall and Packages Diversify

Foreign budget carriers are scrambling to enter the Korean market as more Koreans travel overseas each year and visitor numbers from China, Japan and Southeast Asian countries now exceed 7 million.

In addition to the six already operating here, four newcomers have recently joined or will soon enter the market to grab a piece of the pie. This will heat up competitions and make it more convenient to travel to around 20 major cities in East Asia.

◆ New Entrants

The Ministry of Land, Infrastructure and Transport said on Wednesday that four foreign airlines will start offering services here -- Spring Airlines, Hong Kong Express, Vanilla Air and VietJet.

Spring Airlines will fly between Shanghai and Jeju once a day starting from March 30. An affiliate of Shanghai Spring International Travel Services, it is one of China's leading budget airlines and has 40 A320-200 planes that can each seat up to 180 people. Last year, it posted 4.3 billion yuan in sales, largely operating from Honggiao and Pudong airports in Shanghai, and dominated the nation's low-cost airline market by offering dirt cheap tickets for as low as 1 yuan and 9 yuan each.

It recently stirred controversy due to its plan to offer standing tickets on domestic routes at 30 percent cheaper prices than regular tickets.

Hong Kong Express, which entered the market last year, will provide flights between Incheon and Hong Kong twice a day from March 30. Japan's Vanilla Air, based on an investment from ANA, kicked off its services here on March 1, operating the Incheon-Narita route twice a day. Meanwhile, VietJet Air of Vietnam plans to fly between Incheon and Hanoi once a day from October.

The four newcomers bring the number of foreign budget carriers offering services here to 10. They carried a combined 1.43 million passengers last year, and the figure is expected to hit the 1.5 million mark this year.

◆ Soaring Market Shares

Korean budget airlines have also been expanding rapidly since they launched international flight services five years ago.

On March 20, 2009, Jeju Air became the nation's first low-cost carrier to provide regular international flights between Incheon and Osaka, with Jin Air, Air Busan, Eastar Jet and T'way Airlines following suit. They now fly to 29 cities in nine countries including Cambodia, China, Japan, Guam, Laos, Malaysia, Taiwan, Thailand and the Philippines.

Their combined passenger numbers ballooned from 163,975 in 2009 to 4.91 million last year, almost a 30-fold growth. Their market share also grew from 0.5 percent to 9.6 percent over the same period, and will likely surpass the 10 percent mark this year.

As more people travel by plane, passengers put more emphasis on cost and flight schedules rather than other services like in-flight meals and flight mileage, a Jeju Air spokesman said. Short-distance routes will be dominated by budget carriers in the future, he added.

At the end of last year, Jeju Air and Jin Air owned a combined 55 percent of the market for all routes to Guam, leapfrogging Korean Air. Budget carriers account for 56 percent of the Gimhae-Cebu route.

The travel industry is welcoming the increased competition as it means falling flight costs and greater diversity in terms of tour packages.

englishnews@chosun.com / Mar. 20, 2014 09:47 KST

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