The number of passengers for domestic low-cost carriers (LCC) in the second quarter has decreased compared to the same period last year. LCCs are expected to rely on the summer peak season, but due to the stabilization of low fares following the Muan Airport incident late last year and reduced demand following rumors of major earthquakes in Japan, projections indicate that negative growth this year is unavoidable.
According to the aviation statistics from the Ministry of Land, Infrastructure and Transport on the 14th, the number of domestic and international passengers for LCCs in the second quarter of this year was 17,461,903, a decrease of 2.8% compared to the same period last year. Although the second quarter is considered the off-season, considering that the number of passengers for major airlines such as Korean Air and Asiana Airlines increased by 3.2%, it appears that recent accidents have led to a trend of avoiding LCCs. In the first half of the year, while the number of passengers for Korean Air and Asiana Airlines increased by 3.8% compared to last year, LCCs experienced a decline of 5.4%.
The outlook for the travel peak season in July and August is also not bright. An industry official noted, "Recently, as the weather has become warmer, there is a growing trend of people going on summer vacations more in September than in July and August." A prediction by a cartoonist that a large-scale disaster would occur in Japan on July 5 has also impacted this situation. The industry official said, "With the earthquake rumors and heat waves coinciding, the impact on Japan routes has been significant."
The overall decline in LCC ticket prices due to the influence of the Muan Airport incident late last year is also hindering improvements in LCC performance. An industry official said, "Jeju Air has significantly lowered prices to recover from the aftermath of the incident, leading other airlines to have no choice but to follow suit."
On this day, round-trip tickets between Incheon and Tokyo for July and August are being sold for a minimum of 190,000 won on online travel platforms. A researcher at Korea Investment & Securities, Ko Woo-seong, said, "The substantial fare reductions made to move past the impact of the Muan Airport incident have become entrenched, showing no signs of recovery even in the peak season."
In the securities industry, it is expected that LCCs' performance this year will decline compared to last year. Jeju Air is projected to have an operating loss of 40.7 billion won this year, while Jin Air's operating profit is expected to decrease by 22.4%, from 163.1 billion won last year to 126.6 billion won this year. T'way Air's deficit is expected to expand from 12.3 billion won to 47.8 billion won, and AIR BUSAN's operating profit is projected to decline by 35.1% to 95 billion won this year.