Profitability Improving
South Korea’s large airlines, which face fierce competition from low-cost carriers (LCCs), are aggressively reorganizing their routes. They are suspending their non-profitable flights and focusing on in-demand routes in order to improve the profitability.
According to flight industry sources on November 23, Korean Air will suspend its routes to Saudi Arabia and Cambodia starting February next year. For Saudi Arabia, the airline will temporarily cut the Incheon-Riyadh-Jeddah route, which is currently operated three times a week, from the end of next February and provide the service later again when the market conditions pick up. The suspension of the service is largely due to the fact that Saudi Arabia’s recent economic hit from low oil prices and decreasing plant and oil refining projects had reduced demand of the flights due to the drop in Korean workers residing in the country.
Korean Air will seek to minimize inconvenience for passengers flying from Korea to Middle East by actively seeking out connecting flights with Middle Eastern airlines out of Dubai, which is operated seven times a week now. The company will also be suspending its flights to Siem Reap in Cambodia starting February. The Incheon-Siem Reap route runs a deficit every year due to a lack of tourism infrastructure except for Angkor Wat.
Korean Air will instead launch a new flight to Barcelona, Spain's second city and a major tourist attraction, three times a week, starting from the end of April, and increase flights to Seattle from the current five times a week to seven times a week, from May next year.
Asiana Airlines will increase the number of flights from Incheon to Osaka a day from three to four by the end of March next year. The airline will also increase the Incheon-Miyazaki routes from three times a week to four times a week from early next month to the end of March next year. On October 30, Asiana Airlines increase the number of flights from Incheon to Delhi from five times to seven times a week. It increased the flights again in three months after increasing it from three times to five times a week in July.
On the other hand, Asiana Airlines handed over its flights to Japan’s Takamatsu, Shizuoka, Toyama, Hiroshima, Yonago and Ube to its subsidiary Air Seoul. This is because they are non-lucrative routes for a large airline owing to low demand.