99,000 won → 49,000 won… Half price of’non-landing tourist flight’ in a month due to bleeding competition

Input 2021.02.24 06:00

The aviation industry, which has not been able to properly launch planes for a year due to the corona direct bombardment, is eager to sell non-landing international tourism products, but the price of products has decreased by 40-50% in just one month as price competition intensified.

Airlines go on air ticket sales to preempt passengers and even hold an event that cuts the price of duty-free goods on board by more than half. The profit rate converges to zero due to the bleeding competition, but it is an inconvenient measure to reduce fixed costs a little when there is no sign of recovery in passenger demand.

According to the airline industry on the 24th, among domestic airlines Air Busan (298690)In September of last year, for the first time, students majoring in aviation operation began an experiential educational flight to return to the starting point by returning to the starting point without landing in a specific area, and then domestic airlines successively introduced non-landing flight products for duty-free shopping.

According to the Aviation Business Act, flights that take off from one point and return to the point of departure after flying on a designated route without landing in the middle are classified as tourism flights, and airlines can legally sell such products. They fly over the East Sea for 2 to 2 hours and 30 minutes to see Dokdo and Ulleungdo, or fly back to Japan’s Tsushima along the international route. Passengers can also purchase duty-free goods according to the purchase limit of $5000 (tax-free limit of $600). Due to the coronavirus ban on eating and drinking, in-flight meals and beverages will not be provided.

The reaction is hot. According to the aviation information portal system, on the 20th and 21st, the non-landing tour products operated by LCCs recorded a boarding rate of over 90%. On the 20th, Air Busan sold 133 seats, 60% of the seats, by keeping it away from the 220-seat aircraft A321, with 124 people on board. Air Seoul also boarded an aircraft of the same size on the 21st. An Air Seoul official said, “The boarding rate for non-landing flights has risen to 98%, and there are many in-flight sweepstakes events that provide airline tickets for Jeju routes, so demand is high.”

Despite high demand, airlines argue that it is difficult to expect meaningful profits. The non-landing tourism flight was initially attracted attention as a countermeasure by LCCs, which are experiencing a liquidity crisis, but shortly after the operation, the supply increased and the price decreased significantly.

Air Busan sold a non-landing tourist flight product for 49,000 won. The price has dropped significantly, but the composition of the product that rotates over Tsushima for two hours is the same as the one sold at 99,000 won last month. Air Seoul will set the fare for non-landing tickets departing next month from 70,000 won and sell duty-free items at a discount of up to 75%. Jeju Air (089590)Also, it is selling non-landing tickets departing on the weekend of next month starting at 71,000 won.

An official from Air Busan said, “Even if we see a deficit right now, we want to increase our sales even a little by selling duty-free goods by picking up one more passenger to stop the airliner.” It is judged that it is better to fly the aircraft in order to maintain the flight qualifications of the pilots of each airline, as the fixed costs such as the bicycle fee and the airport facility usage fee are considerable.

Another LCC official who requested anonymity also said, “Considering the reduced number of seats sold by the distance, fuel costs, take-off and landing costs, and operator costs, the airfare per person must be at least 150,000 won to avoid a deficit.” The right to use the airport at certain times) Competition is also fierce, so it will become more and more difficult to generate profits, but in order to reduce fixed costs by even a penny rather than profits, we are crying and eating mustard.”

A380, the largest airliner called the’Hotel in the Sky’, is set for a non-landing tourism flight differentiated from LCC. Korean Air (003490)and Asiana Airlines (020560)Also joined the price competition. Korean Air, which is operating a non-landing flight for the first time on the 27th, has sharply cut prices for products next month. The flight departing this month was sold at 229,000 won for economy class (window), 500,000 won for business seats, and 700,000 won for first class, but the product for March was at Hanjin Tour for 199,000 won for economy, 399,000 won for prestige, and 499,000 won for first class. On sale In addition, it offered boarding mileage for each class, Korean Air Prestige lounge access, and domestic hotel discount coupons to attract customers.

Asiana Airlines, which filled 200 out of 298 seats in a non-landing flight on the 21st and showed a lower boarding rate compared to LCC, lowered the fare for economy class from 250,000 won in December last year to 140,000 won. An Asiana Airlines official said, “We have adjusted the price by changing the flight course to a shorter time,” and said, “Prices are operated flexibly according to market conditions.”

An airline official said, “All airlines are flying while seeing a deficit when they are stopping their planes,” he said. “Right now, we are living with sightseeing flights or low-cost airline tickets, but I don’t know how long we will be able to withstand this situation.”