Budget, full-service airlines reduce routes, free baggage allowances to offset surging jet fuel prices

Both budget and full-service domestic airlines are cutting the number of flights, with some also reducing free baggage allowances, to offset mounting losses from a surge in jet fuel prices, caused by the conflict in the Middle East.

Asiana Airlines, a full-service carrier, is reducing the number of flights from Incheon to Cambodia’s Phnom Penh and China’s Changchun and Yanji, according to industry sources on Monday. It has also suspended some long-haul routes between Incheon and Kazakhstan’s Almaty, as well as Incheon and Istanbul.

Budget carriers have been doing the same. Eastar Jet has suspended its Incheon-Phu Quoc, Vietnam, route through the end of the month. Jin Air cut 131 round-trip flights across 14 routes, including from Incheon to Guam; Nha Trang, Vietnam; and Phu Quoc, as well as from Busan to Cebu, the Philippines. Air Busan and Aero K are also reducing their service on Southeast Asian and Japanese routes. T’way Air plans to reduce its Incheon-Paris service for a period beginning next month, which is a notable retreat for a carrier that had positioned the route as a flagship of its long-haul ambitions.

The combined operating loss forecast for Korea’s six listed airlines — Korean Air, Asiana Airlines, T’way Air, Jin Air, Jeju Air and Air Busan — stands at 516.2 billion won ($350.1 million) for the second quarter, according to financial data firm FnGuide. Most carriers except for Korean Air are expected to post losses, with Asiana Airlines projected to record an operating loss of 272 billion won and T’way Air of 132 billion won.

To offset the pressure, T’way Air is set to reduce free baggage allowances on routes to Australia, Mongolia and Uzbekistan starting in October. Airlines often consider lowering baggage limits and increasing fees for excess luggage as a way to boost revenue.

Major furloughs are already underway at T’way Air and Aero K. Additionally, Jeju Air is reportedly pursuing unpaid leave for cabin crew next month, and Jin Air has indefinitely postponed a safety bonus payment to employees.

Fuel costs account for roughly 30 percent of an airline’s total expenses. Korean Air and Asiana Airlines alone are expected to consume a combined 42.05 million barrels of jet fuel this year. Every one-dollar change in the price per barrel translates to roughly $42 million in profit or loss. The average Singapore jet fuel price increased from $195.40 per barrel in March to $200.42 in April.

“Airlines will likely continue trimming low-profitability routes and realigning capacity around high load-factor routes,” an industry representative said. “They will probably also further expand ancillary revenue and improve aircraft and crew utilization.”

This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom.

BY PARK JONG-SUH [lee.jian@joongang.co.kr]