South Korea’s low-cost carriers (LCCs) are poised to deliver weak first-quarter earnings, weighed down by a series of incidents that have eroded passenger confidence. Following a major accident involving Jeju Air at Muan International Airport late last year, Air Busan reported a fire onboard one of its aircraft, while Air Premia faced a structural defect issue, contributing to a sharp decline in demand for budget airlines. As traveler numbers fell, carriers ramped up price competition in an effort to fill seats.
According to industry sources on Apr. 28, Air Busan said its preliminary revenue for the first quarter declined 8.3 percent year-on-year to 249.6 billion won, with operating profit plunging 43.4 percent to 40.2 billion won ($27.9 million). The carrier was particularly impacted by a fire that broke out aboard Flight 391, scheduled to depart from Gimhae International Airport to Hong Kong in January, which led to the retirement of an Airbus A321-231 aircraft.
Other budget airlines are expected to post similarly disappointing results. Financial information provider FnGuide projected Jeju Air’s first-quarter operating profit would sink 96.07 percent from a year earlier to 3.1 billion won ($2.15 million). T’way Air’s operating profit is estimated to have fallen 50.33 percent to 38.7 billion won ($27 million), while Jin Air’s operating profit is expected to drop 33.20 percent to 65.8 billion won ($45.7 million).
The series of aviation incidents has deepened traveler reluctance toward LCCs, prompting airlines to slash fares in response. Air Busan reported that its revenue per available seat kilometer (ASK)—a key industry metric reflecting transport capacity—fell 10 percent year-on-year, from 130 won to 117 won in the first quarter. ASK is calculated by multiplying available seating by flight distance, and a decline in revenue per ASK typically signals lower fares or a decrease in high-paying passengers.
A similar pattern is emerging across the sector. Choi Go-woon, a researcher at Korea Investment & Securities, noted, “Jeju Air’s significant fare cuts have intensified earnings pressure across the LCC sector,” adding that internal estimates showed international ticket prices dropped nearly 20 percent for Jeju Air, more than 10 percent for T’way Air, and around 10 percent for Air Busan and Jin Air during the first quarter.
South Korea currently has nine low-cost carriers, with supply continuing to grow as new aircraft are added each year. With competition intensifying, fare cuts by one airline often trigger similar moves across the sector. An aviation industry source said, “Airfares are adjusted seasonally, but when the market weakens, carriers tend to follow one another in lowering prices.”
Since the Jeju Air accident late last year, the hesitancy toward LCCs has become more evident. According to the Ministry of Land, Infrastructure and Transport’s Aviation Information Portal System, total passenger traffic for LCCs in the first quarter fell 8 percent year-on-year to 16,146,113. By airline, Jeju Air posted the steepest decline at 22.6 percent, followed by Air Busan at 18.3 percent and Jin Air at 3.1 percent. In contrast, full-service carriers (FSCs) Korean Air and Asiana Airlines saw their combined passenger numbers rise 4 percent to 12,996,266 over the same period.
