|An aircraft of T'way Air / Courtesy of T'way Air|
By Baek Byung-yeul
Low-cost carriers (LCC) are planning to increase their air routes to Europe and other medium- and long-distance destinations as the country's two main carriers ― Korean Air and Asiana Airlines ― may possibly give up some of their flight routes as a condition suggested by the antitrust regulator to approve the former's acquisition of the latter.
In November 2020, Korean Air announced that it would acquire debt-ridden Asiana Airlines for 1.8 trillion won ($1.5 billion), but the acquisition process is still pending awaiting approvals from antitrust regulators in multiple countries.
On a related note, Korea's Fair Trade Commission (FTC) said at the end of December that it will grant an approval for the acquisition on the condition that the two air carriers return some of their airport landing slots and flight licenses.
The slot refers to the right of an airline to use the airport, while the license means the right to operate at airports in overseas countries. By handing over some of its slots and licenses to LCCs, an FTC spokesperson said the competition agency intends to boost market competition and dispel concerns about monopoly issues.
Local LCCs welcomed the decision as the redistribution of the slots and licenses would help them diversify their business models. Since the long-distance routes such as Europe could be included among the routes to be redistributed, they are scrambling to introduce addition large-sized aircrafts.
Though they are currently focusing on short-distance routes to Jeju Island, they are seeking a chance to rebound with long-distance routes after the pandemic situation is under control and international travel resumes.
The local budget carrier T'way Air said recently it will consider introducing medium- and large-sized planes capable of long-distance routes to destinations such as to the U.K., France, Spain as well as U.S. cities.
Another budget carrier Air Premia has been operating Boeing's medium-sized B787-9 jets on its Singapore route. The air carrier, which first launched international flights on the Incheon-Singapore route in December, is planning to launch flights to the U.S. this year. Jeju Air is also reportedly considering launching medium- and long-distance flights.
Experts revealed LCCs' attempt to expand long-distance routes will help improve their performance.
"Airlines capable of operating long-distance routes will be the first to benefit from the recovery of international passengers after the COVID-19 situation gets better," said Na Min-sik, analyst at eBest Investment & Securities. The analyst said T'way will operate jets on long-distance routes after February, adding that the air carrier is "expected to see growth in sales as early as the second quarter."
However, there are concerns about long-distance flights from budget air carriers. These airlines have maintained low airfare fees through relatively low-quality services, such as minimizing in-flight services and reducing the amount of luggage space available on short-distance flights.
It also remains to be seen whether airlines specialized in short-distance flights are capable of operating on longer routes together given long-distance flights require improved service quality and more personnel as well as higher airplane maintenance costs.