Budget Carriers Boost Domestic Flights Despite Losses
20 April, 2020
Low-cost carriers in Korea are boosting domestic flights to remain afloat after putting many staff on indefinite leave and making massive losses.
T'way Air made a decision 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 boost the number of Gimpo-Busan by 33 percent in-may, a proportion demand can scarcely support, with prices dropping only W14,900 (US$1=W1,218).
At that rate no profits are possible yet. One budget airline staffer said, "We have to pay parking service fees if we leave aircraft idling, which can also result in maintenance problems, so we're boosting the quantity of domestic flights to remain afloat regardless if we don't make profits."
Another said budget carriers' sales have fallen to just eight percent of last year's.
The problem 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 per month, and it also has to repay W240 billion in corporate debt this month.
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