Jeju Air (089590) has reached 10 million passengers in the shortest time on record this year, a result the carrier attributes to expanding routes ahead of rising demand for short-haul travel to China and Japan.
Jeju Air carried a combined 10,128,500 passengers from January through September, including 3,642,300 on domestic routes and 6,486,200 on international routes, according to the air transport information portal of the Ministry of Land, Infrastructure and Transport on the 12th. That marks a 13.1% increase from 8,955,900 a year earlier.
The carrier simultaneously set a record for the fastest climb to 10 million passengers and its highest January-September passenger total. Jeju Air is the only South Korean low-cost carrier to pass 10 million passengers so far this year.
Japan and China routes led the growth. Passengers on Japan routes rose 29.1% to 3,703,200 from 2,869,500 a year earlier, while China route passengers climbed 34.1% to 582,400.
By route, Incheon-Osaka was the busiest with 633,600 passengers, followed by Incheon-Tokyo Narita with 618,700, Incheon-Fukuoka with 448,100 and Busan-Osaka with 212,000.
Jeju Air said the effects of its early decision to add flights to Japan and China are now taking hold. The carrier increased service on the Incheon-Tokyo Narita, Incheon-Fukuoka and Busan-Osaka routes in May and launched a new Incheon-Kobe route with seven weekly flights in June. On China routes, it added flights from Incheon to Weihai, Yanji and Qingdao, and began service between Busan and Guilin in September.
"With high oil prices and a weak won adding to travel costs, demand appears to be shifting toward short- and medium-haul routes that offer relatively reasonable fares," a Jeju Air official said. "Next year as well, we plan to watch market demand closely and keep expanding options for customers through efficient route operations."
Against that backdrop, expectations are building that Jeju Air will be the only low-cost carrier to return to an operating profit in the third quarter. Korea Investment & Securities, which released its third-quarter estimate for Jeju Air this month, projected an operating profit of 8 billion won, while Hanwha Investment & Securities forecast 9 billion won.
"Restructuring is now under way across the low-cost carrier industry, and profitability is rebounding faster than expected at the larger players," said Choi Go-woon, an analyst at Korea Investment & Securities. "Jeju Air is the only one maintaining a pure low-cost carrier model, and that simplicity is contributing significantly to better profitability, which should allow it to swing to a profit in the third quarter."
