New Korean Airline Ready for Takeoff

Jeju Air, Korea’s third regular air carrier after Korean Air (KAL) and Asiana, will begin flight operations on June 9.

Jeju Air, an affiliate of Aekyung Group, announced on March 1, “Our first airplane will take off for the first time on June 9, which is the anniversary of Aekyung Group. The flight will be between Seoul and Jeju.”

As the countdown to Jeju Air’s first operational flight begins, following Hansung Air, a non-scheduled carrier that resumed operations February 15, it is expected that this will highly affect the domestic market for flying air passengers currently dominated by KAL and Asiana.

Local autonomous entities in places like Busan, Incheon, North Jeolla Province, North Gyeongsang Province and Gangwon Province are busily making moves to establish low- fare air carriers.

Jeju Air will finish selecting its flight attendants within this month and will launch the company’s advertising campaign next month.

Its five turboprop aircraft (Q-400, 74 seats) newly made in Canada will arrive starting May 2. Flight tickets will be sold starting in May as well.

The fare for a flight between Seoul and Jeju is in the 50,000 won range, 70 percent of current airline fares (84,400 won). The fare for a flight between Seoul and Busan will be cheaper than that of a special seat on the Korea Train Express (KTX), which is 62,700 won.

The airline will operated Q-400 aircraft, known for higher fuel efficiency than jets, and in-flight services will be greatly reduced.

President Ju Sang-gil of Jeju Air said, “If flight operations start as planned, annual revenues of 40 to 50 billion won will be generated starting next year, and from the year 2009, we are hoping for a revenue surplus.”

Established low-fare air carriers are expected to take measures to compete in the footsteps of Jeju and Hansung airlines.

Local autonomous entities in places like Busan, Incheon, North Jeolla Province, North Gyeongsang Province and Gangwon Province are actively pursuing to establish low-fare airlines to activate local airports and develop the local economy. Jeonbuk Air, which was established last July with a capital outlay of 500 million won, could get construction company “S” onboard as a shareholder.

Kim Yeon-myung from the air traffic lab of the Korea Transport Institute said, “In Europe and the U.S., low-fare airlines make up 30 percent of total passenger transportation. There is high potential for low-fare airlines to grow considering that low- fare airlines take up only three percent of the market in Korea, Japan and China.”

Air flight experts expect that if the number of low-fare airlines increases, there will be an increase in air passenger demand, service improvements due to competition between the airlines, and acceleration in the development of the airline industry.

Lim Ju-bin, aviation policy director of the Ministry of Construction and Transportation, said, “Aircraft owned by KAL and Asiana are large aircraft with over 150 seats, so local airports that generally have only 50 to 60 passengers per day cannot afford to receive these aircraft. If low fare air carriers start to operate in these local airports, it would greatly contribute to local economic development.”

But some are voicing concerns over the side effects that could be caused by too much competition. Critics point out that security issues could become a major problem.

Professor Heo Hee-young of the business department of Hankuk Aviation University said, “There are some who think establishing aviation businesses is as easy as establishing a bus company” and emphasized that “People should not forget that a flight accident could lead to large-scale loss of lives.”

Jae-Seong Hwang jsonhng@donga.com