SKorea's Jeju Air sees good opportunities amid rising demand for cheap flights
KITAKYUSHU (XFNews) - Jeju Air Co Ltd, a South Korean low-cost carrier that will start operations next year, sees growing business opportunities in South Korea to fly under-serviced routes with discounted fares amid increasing demand for cheaper air travel, the company's advisor Dae-Young Ham said.
The airline will start operating next June on four routes linking Jeju-Seoul, Jeju-Pusan, Seoul-Pusan and Seoul-Yangyan, with a total of 60 flights a day, he said in an interview during a regional low-cost airlines symposium here.
A survey shows that 70 pct of South Korean people want to travel by air but cannot afford because it is too expensive," the official said.
"Two existing airlines (Korean Air and Asiana Airlines) claim they are low cost airlines, but I don't think that is the case. If we compare with global average, their fares are much higher," Ham said.
Jeju expects its number of passenger to total 1 mln people in the first year and generate profit of 2.5 mln usd, he said.
The airline's strategy to create new demand for air travel is offering fares which will be on average about 30 pct lower than that of existing airlines, on new routes, Ham said.
To do so, Jeju will need to reduce 30 pct of operation cost, he said, adding that Jeju will achieve this by hiring multi-function staffs and retired pilots and not serving meals on board.
And as tourists to Jeju are currently increasing under the Jeju development plan at a pace of 10 pct per year, "we are very optimistic", Ham said.
Jeju Air purchased five new 74 seater Bombardier aircraft, which will also boost passenger sentiment toward the airline, Ham said.
For future expansion, Jeju plans to add in 2008 two more routes linking Jeju-Daegu and Jeju-Gwangju as well as adding more flights on the Jeju-Seoul and Seoul-Pusan routes, while adding three more aircraft. The total number of passengers at this point will climb to 1.7 mln people per year, Ham said.
After 2010, if an open air agreement is reached by then, the airline hopes to expand its destinations to places such as Japan and China though nothing has been decided yet, he said.
Jeju Air has raised 40 mln usd of capital with investment from Aekyung Group and the Jeju provincial government and will have spent 19 mln usd before operations start next year, Ham said.