Korean Air Announces Low Fare Carrier

Korean Air announced plans yesterday to operate a low-cost airline with up to 30 percent lower fares in 2009 at the earliest. The operation will be entrusted to a subsidiary of the Korea Airport Service.

The Low Fare Carrier (LFC) market is expecting fierce competition, with two airlines in Korea, and China and Thailand getting in on the market.

The main model that Korean Air is planning to operate is the latest model Boeing 737, which seats 170 passengers.

The first domestic routes will lift off from Gimpo to Busan, Daegu, and Ulsan. By 2010, when the Gyeongbu High Speed Railway is completely opened, these routes will compete with the cheap and fast railway.

International routes will focus on China, Japan, and Southeast Asia, where tourists are increasing due to extended freedom of aviation.

Airfares are expected to be reduced by 30 percent for domestic flights and 30 to 50 percent for international destinations.

The two Korean low-fare carriers, Hansung Airlines and Jeju Air, charge 59,000 won and 51,400 won between Seoul and Jeju (weekdays, one-way), 30 percent cheaper than Korean Air. For international routes, the Incheon-Bangkok route on Orient Thai Airlines is 300,000 won, almost half of the 630,000 won that Korean Air charges.

Kim Young-ho, President of Korean Air Passenger Division, said, “We are planning to decrease flight services and cut down on expenses with efficient machinery operation, but raise the quality of service far beyond the standards of any other low-fare carriers.”

bell@donga.com