As T'way Air eyes the No. 2 spot among flag carriers, some in the airline industry say the fare cap imposed on Korean Air could hinder profitability improvements. Because Korean Air cannot raise fares, T'way Air, which competes on the same routes, is also likely to be unable to raise fares.
According to the airline industry on the 9th, the published fares for T'way Air's medium- and long-haul routes average 2.9 million won for a round-trip economy ticket. The Zagreb, Barcelona, Paris and Frankfurt, and Vancouver routes are 2.97 million won, and the Rome route is 2.57 million won.
A published fare is a price registered with and administered by the Ministry of Land, Infrastructure and Transport and the International Air Transport Association (IATA). Because airlines typically discount from the published price when selling seats, the published price effectively serves as the maximum amount an airline charges on a route.
Korean Air's average published round-trip economy fares on the Incheon–Vancouver, Rome, Barcelona, Paris and Frankfurt routes are 3.7 million won. That is 27.9% higher than the average fares for the same routes on T'way Air.
Starting from late 2024, when the merger with Asiana Airlines was approved, Korean Air has been barred for 10 years from raising average fares above the inflation rate. Even if air travel demand grows, it is difficult to raise the fare baseline.
Because of this, the industry sees the possibility of a "price reversal," in which Korean Air's medium- and long-haul fares could fall below those of low-cost carriers such as T'way Air and Air Premia operating the same routes.
As recently as March last year, Korean Air and Asiana Airlines sold tickets for North America and Europe departing soon at 500,000–600,000 won, slightly below LCC prices. At the time, there was analysis that Korean Air, which had raised fares during the January peak season, lowered prices to bring down its average fare.
Given this, the industry expects that T'way Air, which must be sensitive to full-service carriers' fares, could face difficulties improving profitability on medium- and long-haul routes. T'way Air has been in the red since it began operating Europe routes in the second quarter of 2024.
T'way Air posted an operating loss of 21.5 billion won in the second quarter of 2024, swinging to a loss from a profit of 20 billion won a year earlier, and recorded a cumulative loss of 297.7 billion won through the third quarter last year.
An airline industry official said, "Even if a flight is already booked, if the price difference from a full-service carrier flight is not large, switching happens frequently," adding, "If T'way Air is to solidify its position as the No. 2 flag carrier, it ultimately has to generate profit on medium- and long-haul routes, but if it also has to engage in price competition with full-service carriers, it will inevitably struggle."
Earlier, with the integration of Korean Air and Asiana Airlines, T'way Air received transfers of traffic rights for Europe routes such as Frankfurt, Rome and Paris, and is operating 61 international routes. That is the same figure as Asiana Airlines, and it will move ahead once it begins operating the Incheon–Jakarta route it received. Korean Air operates close to 200 international routes, and JIN AIR (46), Jeju Air (43) and Eastar Jet Co. (32) follow T'way Air.
A T'way Air official said, "It is true that we are affected by full-service carriers' fares," adding, "We will respond flexibly to market conditions and secure profitability."