(News Focus) Korean budget carriers weigh adding overseas routes

By Nam Kwang-sik
SEOUL, March 5 (Yonhap) -- At least two South Korean low-cost air carriers plan
to add international flights to their schedules this year in hopes they will
begin to turn a profit, while others are mulling adding overseas routes in 2010.
Four budget carriers -- Jeju Air Co., Jin Air Co., Air Busan Co. and Eastar Jet
Co.-- have been offering domestic flight services but are struggling due to weak
demand.
The nation's biggest budget carrier, Jeju Air, posted a loss of 21.1 billion won
(US$13.6 million) during the January-September period of 2008, up from a loss of
6 billion won a year ago.
Other carriers have yet to announce their business performances as they started
providing flight services only in the second half of last year, industry sources
said.
Market watchers say the discount carriers will have difficulty filling planes on
overseas routes to China, Japan and Southeast Asia as the most lucrative routes
are already well-serviced.
"The full-service airlines such as Korean Air Lines and Asiana Airlines have
already occupied the profitable routes to China, Japan and Southeast Asia," said
Song Jae-hak, an analyst at Woori Investment Securities Co. "How they develop new
lucrative routes to the regions will be crucial to profit-making."
Jeju Air plans to offer regular flights from Incheon, South Korea's main gateway,
to Kitakyushu, Japan and to Osaka starting March 20.
The company has a fleet of six passenger aircrafts, comprised of four turboprop
planes and two 189-seat Boeing 737-800s. It will increase its fleet to 21 planes
by 2013.
In November of last year, the budget carrier signed a preliminary deal with GE
Commercial Aviation Services, the world's top aircraft leasing company, to
introduce a new aircraft into its fleet. They will be delivered by the end of
March.
Jin Air, owned by Korean Air Lines, is mulling beginning flights to Japan, China
and Southeast Asia in the second half of the year. The carrier began offering
domestic flight services in July 2008.
"We are considering flying overseas in October, but the routes have yet to be
determined," said Jin Air spokesman Park Jeong-hoon.
Jin Air has a fleet of three Boeing 737-800s and it will introduce another plane
in April, Park said, without giving further details.
Air Busan, whose controlling stake is owned by Asiana Airlines Inc., plans to
provide regular international flights to Japan and China in the first half of
next year.
"We are going to operate international flights in the first half of next year and
introduce two 160-seat Boeing 737-400s in March and June," said Kwak Ji-eun, a
spokesperson for Air Busan.
Air Busan launched domestic flight services in October of last year and has a
fleet of 127-seat Boeing 737-500s.
Eastar Jet, a budget carrier that began providing domestic routes in January,
plans to begin service to Vietnam and Japan next year.
New local carriers are required to meet the legal requirements to fly overseas
routes, meaning they must have flown over 10,000 domestic flights and operated
accident-free for at least one year.
Hansung Airlines, the country's first budget carrier, suspended flight services
in mid-October last year amid the deepening economic downturn. Another Korean
budget carrier, Yeongnam Air Co., went belly-up early last December.
ksnam@yna.co.kr
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