Last year, the operating profit of major low-cost carriers (LCC) decreased uniformly compared to the previous year. The surge in the won-dollar exchange rate increased expenses, and fare prices dropped due to intensified competition. The impact of the disaster involving a Jeju Air passenger plane at Muan International Airport at the end of last year has led to stricter regulations, and this will increase the cost burden further this year.
According to the aviation industry on the 4th, the four listed LCCs—Jeju Air, T'way Air, Jin Air, and AIR BUSAN—saw revenue increase compared to the previous year, but their operating profits decreased. T'way Air recorded an operating loss of 12.3 billion won last year, turning from a profit of 139.4 billion won the previous year. Jeju Air had an operating profit of 79.9 billion won last year, down 52.9%, while Jin Air's operating profit decreased by 8.5% to 166.7 billion won. AIR BUSAN also fell by 8.4% to 146.3 billion won compared to the previous year.
LCC companies cited the increase in expenses due to the surge in the won-dollar exchange rate and increased foreign exchange translation losses as the causes of their poor performance. The industry also considers the drop in fares due to intensified competition as a contributing factor. Jeju Air's international passenger fare recorded 78 won per kilometer in 2023, down from 76 won last year, a decrease of 3%. Jin Air's international fares also fell by 1% during the same period. T'way Air's fare per kilometer dropped from the 90 won range to 86 won during this period.
Analyst Ahn Do-hyun of Hana Securities noted, "The main reason for the poor performance is the decline in international fares," adding that "the factors leading to the low price-to-earnings ratio of LCC companies are the volatility in performance due to intensified competition."