Passengers are seen at the departure hall at Incheon International Airport.NEWS1
Fuel prices, which had surged amid the conflict in the Middle East, have begun to decline ahead of the peak summer travel season, offering some relief to a Korean airline industry beset by soaring fuel costs and a weak won.
International airline tickets issued next month will be subject to a Level 19 fuel surcharge, according to the aviation industry on Friday. That is eight levels lower than June's Level 27 and 14 levels below May's record-high Level 33, the highest possible grade.
Fuel surcharges are imposed when jet fuel prices exceed a certain threshold and are adjusted on a scale ranging from Level 1 to Level 33 based on fuel prices. Lower fuel surcharges reduce the additional fees passengers pay on top of base fares, easing travel costs for paasengers.
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For Korean Air, fuel surcharges reached the maximum level in May, pushing round-trip fuel surcharges on U.S. routes such as New York and Atlanta to as much as 1.13 million won ($735). These costs are added on top of the price of a normal ticket, which usually includes a base fare, taxes and other fees.
With the surcharge dropping to Level 19 in July, that will drop it to 688,000 won, roughly 60 percent of the previous level. Travelers purchasing round-trip tickets on long-haul routes will thus save more than 400,000 won on fuel surcharges alone.
Lower oil prices also directly improve airline profitability, as fuel accounts for one of the largest components of carriers' operating costs. According to Korean Air's annual report, the airline spent $2.92 billion on jet fuel purchases last year, far exceeding its standalone operating profit of roughly $1 billion during the same period. The figures underscore how heavily airline earnings depend on fuel prices.
Passenger aircraft from T'way Air, now operating as Trinity Air, are seen parked on the apron at Incheon International AirportJOONGANGILBO
Low-cost carriers (LCC), which had struggled with soaring fuel costs, have also begun preparing for the summer peak travel season by expanding flight schedules. Rather than aggressively adding long-haul routes — which are more vulnerable to fuel cost and exchange-rate fluctuations — most carriers are focusing on closer destinations such as Japan, China and Southeast Asia, where demand has been growing lately.
Jeju Air, the country's largest LCC, will increase flights on its Incheon-Ulaanbaatar route from five services in a week to daily flights between July 10 and Aug. 18.
Eastar Jet will add one daily flight each on its Incheon-Tokyo and Incheon-Fukuoka routes starting in August.
Jin Air will also resume service seven times a week on its Incheon-Yantai route, serving the coastal city in China's Shandong Province, beginning Aug. 18.
"Most LCC are still grappling with financing costs stemming from high interest rates and the weak won, so they are likely to prioritize risk management over aggressive route expansion," an industry source said.
Ahn Do-hyun, an analyst at Hana Securities, said, "In the third quarter, earnings are expected to reflect revenue from tickets sold after fares were raised following the Middle East conflict, while cost pressures from higher fuel prices are expected to ease."
"The recent situation also demonstrated that short-haul routes have limited ability to pass higher costs on to consumers," Ahn added. "Going forward, fare hikes are likely to be concentrated on long-haul and premium routes."
This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom.
