Chinese low-cost carriers (LCC) are expected to enter the Korean market with the support of the local government. If China`s low-cost airlines come to the country in a few years, it is expected that national carriers will be forced to stay in the forefront of price competition. The domestic LCC industry is only a handful of companies, and the price is virtually the same as that of a major airline (FSC).

According to the "Chinese airlines and policy outlook" on September 28, professor of British Columbia University in Canada, the Chinese aviation industry is currently in agreement with 10 ASEAN countries on aviation liberalization, Demand is being eroded.

Accordingly, the local government is expected to establish an LCC based in 88 cities with a population of 5 million or more. Huh Hee-young, a professor in the Department of Business Administration at Korea Airways, said, "I expect LCCs to be set up at key locations in China within a few years," he said.

As a result of examining the route between Gimpo and Jeju on September 29, which is just before the start of the Golden Holidays, the price of LCC and FSC was KRW 10,000. Asiana Airlines has a price range of KRW 82,600 to KRW 104,400, while Eastar Jet has KRW 89,700 to KRW 119,900. On the contrary, Jeju Airlines cost KRW 103,900 more than Asiana Airlines. An expert in the industry said, "The domestic LCC industry is not a true LCC but rather a MCC (Middle Cost Carrier).”
Of course, China`s domestic market opening is impossible without air liberalization. In countries where aviation liberalization has not yet been concluded, airlines may not be willing to open new routes. The governments of each country must hold talks to gain the right to operate and to operate.

Korea and China, in 2006, signed an airline liberalization agreement for two cities in China, Shandong Province and Hainan Province. Korean airlines dominated the market in the early days, but since 2008, they have occupied more than 60% of the market with China`s price competitiveness.

Some analysts say the air fare dropped to USD 210 from USD 420 to USD 530 after six months of negotiations. According to an expert of the aviation industry, "In Korea, there is a tendency to see new LCC companies entering the market as negative competition, negatively.”

By Kim Yang Hyuk mj@


[ copyright ⓒ The Digitaltimes ]