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Korean, Chinese Airlines in Fare War

Posted August. 16, 2006 03:02,   


The race is on to lower the airfare for trips between Korea and China.

Several Chinese airlines have already sharply cut a return ticket price between Incheon and major cities in Shandong Province down to the 200,000 won range from the previous 400,000 to 500,000 won range, and domestic carriers such as Asiana Airlines and Korean Air are set to follow. Some even predict the airfare for this route will fall down to the 100,000 won range.

China Eastern Airlines, a Chinese private carrier, announced on Tuesday that it has brought down the return fare between Incheon and Qingdao of Shandong Province to 200,000 won. This is an additional price cut since it slashed the fare for the same route down to 240,000 won from 400,000 won on July 28.

The Chinese carrier also lowered the prices for return trips between Incheon and Yantai and between Incheon and the famous holiday destination of Hainan Island, from 450,000 to 240,000 won and from 550,000 to 260,000 won, respectively. The return fare for the Incheon-Ningbo route, which has been newly established to fly twice a week starting August 9, has been set at 240,000 won.

These prices are not much higher than Korean Air and Asiana Airlines’ peak season prices for Seoul-Jeju return trip, which costs 185,800 won.

The local carriers are also projected to join the price cut race for the Korea-Shandong routes.

Korean Air has decided to lower the fare between Incheon and Weihai down from the current 290,000 won to 200,000 won starting August 25. It also plans to lower the Incheon-Qingdao return fare from 330,000 won to the 200,000 won range, and set the price for the Incheon-Yantai route, which begins service also on August 25, at 200,000 won, taking the competitors’ prices into consideration.

Asiana Airlines will also lower its Incheon-Yantai return fare from the 350,000 won down to 200,000 won beginning August 25, and is now mulling over cutting prices for other routes too.

“It’s true that the fares for Shandong Province in China were too expensive compared to other regions at similar distance, such as Jeju Island,” said Bae Woo-seong, the head of Planning and Public Relations Department at China Eastern Airlines. “In the future, the heightening competition between Korean and Chinese carriers to lower prices and increase services is highly likely to bring the fare between Korea and cities in Shandong down to the 100,000 won range.”

The race to cut the fares for routes between Korea and China began in earnest following the results of the Korea-China Air Travel Conference.

At the talks, Seoul and Beijing agreed on an open-sky deal to be carried out in phases, and for the first step, designated routes between all Korean cities and China’s Shandong Province as the routes to test waters.

Air travel liberalization allows airlines to decide the area and the number of services as well as airfares according to demand, without obtaining sanction from the authorities.

As the two countries will be expanding the liberalization zones every year, the race to cut prices, which began for routes between Korea and Shandong, is expected to spread to Beijing, Shanghai, and other major Chinese cities.