T'way Air has decided not to operate a large number of flights to China, Laos and Bangkok that were scheduled for the first half of this year. Despite the burden of non-operation, such as a decline in credibility, the aviation industry says the company made a bold decision to break out of continuing losses.
According to the aviation industry on the 11th, T'way Air has decided not to operate some scheduled flights from Incheon to Vientiane, Laos; Kota Kinabalu, Malaysia; Tashkent, Uzbekistan; and Shenyang, China starting in March.
On the Incheon–Vientiane route, some flights will not operate from Mar. 16 to 27. On the Incheon–Kota Kinabalu route, some flights from the 3rd to the 28th of the same month are affected, and on the Incheon–Tashkent route, some flights from Mar. 6 to 27 are affected.
On the Incheon–Shenyang route, some flights from Mar. 2 to Apr. 26 have been included among the non-operating flights. In addition, the company decided not to operate some flights on the Cheongju–Bali, Indonesia route (Mar. 3–Jul. 15) and the Daegu–Bangkok, Thailand route (Mar. 26–Jul. 15).
T'way Air said of the decision not to operate, "This is to manage flexibly by comprehensively considering passenger demand and business schedules depending on when a route is operated," adding, "For affected passengers, we plan to waive refund fees or change them to nearby flights."
The aviation industry calls it unusual. While airlines sometimes decide not to operate due to aircraft issues or a sharp drop in demand, in the case of T'way Air, the scale is too large. Industry analysts say T'way Air unavoidably made this decision to improve profitability amid consecutive losses.
Airlines with traffic rights must operate at least 80% of the slots allocated for each summer and winter schedule to secure vested rights (the right to receive priority allocation of the same slots in the same schedule the following year).
For this reason, there is a basic burden to deciding not to operate. Even if they meet the 80% operation record, they could face disadvantages in the Ministry of Land, Infrastructure and Transport's future allocation of new traffic rights, and they also risk a decline in customer trust.
Because of this, major airlines such as Korean Air Lines and Asiana Airlines are not deciding not to operate due to demand issues. Even when problems such as aircraft defects occur, they deploy replacement aircraft to minimize non-operation. An industry official said, "Since fares are high for major airlines, they make every effort to ensure operational stability," adding, "Cases of deciding not to operate due to factors such as declining demand are extremely rare."
Other low-cost carriers (LCCs) also say they are minimizing non-operation. Jeju Air said there have been no changes to the remaining winter schedule through Mar. 28 and the summer schedule so far.
Jin Air has decided not to operate only on the Incheon–Phuket route, while Eastar Jet Co. has decided not to operate the Incheon–Da Nang route from May 9 to 20 and the Incheon–Nha Trang route from Jun. 10 to 30, citing aircraft inspections.
T'way Air swung to an operating loss of 21.5 billion won in the second quarter of 2024 and is expected to have posted seven consecutive quarterly losses through the fourth quarter of last year. The industry views this as an all-out push to improve profitability despite the burden of non-operation.
The view is that by suspending mainly Southeast Asian routes that enter the off-season after March, the carrier aims to pour the capacity secured into new launches such as Busan–Chiang Mai and Jeju–Fukuoka and routes with strong demand to boost profitability.
According to FnGuide, T'way Air's fourth-quarter consensus estimate last year on a consolidation basis is revenue of 469.7 billion won and an operating loss of 31.9 billion won. Revenue is expected to rise 19.5% year over year, but the loss to widen 47.6%.
The full-year consensus estimate last year on a consolidation basis is revenue of 1.7515 trillion won, up 14% from the previous year, and an operating loss of 223.1 billion won, up 1,718.4%.
Many of the regions where T'way Air decided not to operate are seeing a decline in passenger demand. On the Incheon–Laos route, passenger traffic fell 27% year over year to 267,385 last year. On the Incheon–Kota Kinabalu route, passenger traffic also fell 20% over the same period to 419,820.
On the Daegu–Bangkok route, the figure also fell 15% to 107,172. As for the Cheongju–Bali route, which T'way Air has operated exclusively since last year, the decision appears to reflect demand affected by local seasonal factors such as the rainy season.
In the cases of Shenyang, China, and Tashkent, Uzbekistan, non-operation was decided despite rising passenger demand, which the industry views as a move to respond to newly acquired traffic rights on the Incheon–Jakarta route and the Gimpo–Jeju route.
Lee Hwi-young, a professor of aviation management at Inha Technical College, said, "The decision to not operate, which major airlines rarely make, shows that survival is unstable," adding, "In particular, T'way Air has taken on a larger expense burden after receiving traffic rights for European routes, so the need to streamline its fleet is great."
Lee said, "As LCC competition has intensified, to escape the current loss situation T'way Air needs to attract 'sixth-freedom' demand (traffic connecting a third country and the destination country without a nonstop route)," adding, "Now that it has the scale of a major airline, expansion through partnerships with various airlines is essential."
A T'way Air official said, "Like other airlines, we flexibly adjust flight schedules by comprehensively considering route-by-route passenger demand, charter operations and business timing depending on the operating period."