4 new budget carriers enter Korea

SOUTH KOREA - Four new budget carriers have received permission from the Korean government to start operations here, signaling increased competition in low-cost air travel.

The Ministry of Land, Infrastructure and Transportation said Spring Airlines, Vanilla Air, Hong Kong Express and VietJet had been authorised to begin operating this year.

Some of the four have already started offering services, the government sources said.

Spring Airlines is the first low-cost carrier from China to enter the local market, and it will start operating a daily route from Shanghai to Jejudo Island as of March 30.

The carrier owns 40 A320-200 Airbus planes that offer up to 180 seats per aircraft. From its base in Shanghai, the carrier operates 38 domestic routes and around 10 international ones.

Another new carrier is from Hong Kong - Hong Kong Express. The carrier will operate routes from Incheon to Hong Kong twice a day, also as of March 30.

From Japan, Vanilla Air has been operating a route from Incheon to Narita twice a day as of March 1. Vanilla Air is a low-cost carrier operated by Japan's ANA.

VietJet is based in Vietnam, and the carrier will operate a daily route from Incheon to Hanoi starting in October.

"Competition will obviously get more heated, but I believe in the long run, a bigger market will lead to more consumers," Song Kyung-hoon, a spokesman for Jeju Air, told the local media regarding the entry of the four new foreign competitors.

Currently, Peach, Scoot and Cebu Pacific are among the foreign budget carriers operating in Korea.

A recent report from LIG Investment & Securities said, "Competition to attract more travelers, especially those who want to go overseas, will become heated as more multinational budget carriers seek to enter the local markets and contend against Korean carriers.

However, some experts believe a strong Korean currency will help the local airlines maintain an upper hand against their foreign rivals, not to mention that the government is also offering support for domestic carriers.

In an annual policy briefing to President Park Geun-hye last month, the Transport Ministry said it would support the growth of local low-cost carriers, which in turn would create more jobs and boost the competitiveness of the nation's aviation industry.

For this aim, the ministry offered air freight business licenses to the local LCCs to support their business diversification early this year. In addition, it pledged to support the entry of budget Korean airlines into emerging economies in regions such as South America and Eastern Europe.

For long-term growth, however, industry watchers advised budget carriers to improve safety measures, risk management skills and service quality. The Korea Consumer Agency said it received 42 LCC-related consumer complaints last year, seven more than in 2012.