Budget brigade

Just out of interest, the province does have plenty to offer. Picturesque, four-fifths of it is woodland and it is renowned for the edible alpine plants and mushrooms that are harvested in its forests, as well as agricultural produce, in particular potatoes and fish (cuttlefish and pollock). Geography lesson over. Fly Yangyang’s attempt to enter the market – it says it will try again – underscores just how attractive the Korean market has become for budget carriers.

Currently, there are five budgeteers operating in South Korea: Jeju Air, Jin Air, Air Busan, Eastar Jet, Tway Air and Air Seoul. It is no surprise others want to join the club. By the end of last year the share of South Korea’s budget carriers in international passenger traffic had topped 20 per cent, aided by growing demand for cheap air tickets and expanded capacity.

According to data compiled by the Ministry of Land, Infrastructure and Transport, a total of 1.27 million passengers coming into and leaving the country used flights operated by the country’s five budget carriers last November, with their combined market share surging to 22.1 per cent. Their international market portion has been on a steady rise, from 12 per cent in 2014 and 16.2 per cent in 2015. Domestically too, they now dominate the skies, holding around 60 per cent of all traffic.

Domestically too, they now dominate the skies.

The latest figures, for January, show there has been no let-up in Korean’s hunger for low cost travel. During that month, South Korea’s international air passenger traffic jumped 12.1 per cent from a year earlier, helped by a sharp increase in passengers to and from Japan and other Asian countries. Air traffic between South Korea and Japan spiked 19.7 per cent year-on-year to some 1.59 million, while international passengers to and from Southeast Asian nations surged 13.6 per cent to about 2.68 million.

Passengers to and from China gained 4.5 per cent to some 1.53 million, the lower number explained by growing tension between South Korea and China over Seoul’s plan to deploy a U.S. missile defense system, the Terminal High Altitude Area Defense or THAAD. All in all, these impressive figures have been attributed to advances by the low cost carriers, whose international passengers spiked 48.3 per cent year-on-year to nearly 1.68 million in January.

International passengers of the two full-service carriers – Korean Air and Asiana Airlines – slipped 0.9 per cent to 2.92 million, according to the ministry. But the budgeteers now control around 60 per cent of Korea’s domestic market. They are a mix of privately-owned and major airline subsidiaries. Jeju Air is owned by retail conglomerate Aekyung Group.

Jin Air, formerly known as Air Korea, is a wholly owned subsidiary of Korean Air. Air Seoul is a wholly-owned subsidiary of Asiana, which also holds a stake in Air Busan. Eastar Jet and T’way Air, formerly known as Hansung Airline, are privately owned. But with the rapid inroads low cost carriers are continuing to make into the Korean market – both domestically and internationally, it is little surprise other hopefuls have their sights set on joining the club. Apart from Fly Yangyang – it says it will apply again for a licence – another hopeful is Nambu Air, a start-up with registered capital of A$113 million based in South Gyeongsang.

When it will fly is not known but approximately 10% of its investment is to come from the local government with the remaining 90% from five other Korean companies, backing which should give it a good chance of success. What the hopefuls argue is that their potential budget rivals and the country’s major full-service operators almost completely focus their inbound tourism efforts on the major airports in Seoul, Busan and on the holiday island of Jeju, off the country’s south coast, while airports in other parts of the country have been left nearly empty.

It’s a common theme among hopefuls because the incumbents are obviously attracted to the big population centres. There is little doubt, however, that Korea’s budget brigade will grow.