April 20, 2020 12:55
Low-cost carriers in Korea are boosting domestic flights to stay afloat after putting many staff on indefinite leave and making massive losses.
T'way Air decided to offer four flights a day between Gimpo and Busan starting May 1. Jeju Air already boosted Gimpo-Busan flights from two to four times a day. That could increase the number of Gimpo-Busan by 33 percent in May, a proportion demand can scarcely support, with prices dropping as low as W14,900 (US$1=W1,218).
At that rate no profits are possible yet. One budget airline staffer said, "We need to pay parking fees if we leave aircraft idling, and this can also lead to maintenance problems, so we're boosting the number of domestic flights to stay afloat even if we don't make profits."
Another said budget carriers' sales have fallen to just eight percent of last year's.
The situation is no different for large airlines. Korean Air is at risk of running out of cash this month. Last month it issued W622.8 billion in asset-backed securities to bolster liquidity. But fixed costs total W500 billion a month, and it also has to repay W240 billion in corporate debt this month.
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