Travelers wait in line at the departure section of the Incheon International Airport on June 16.NEWS1
Airlines are expected to get some relief ahead of the peak summer travel season as jet fuel prices, which had surged because of the military conflict in the Middle East, have begun to decline. After months of pressure from high oil prices and a weak won, carriers are increasingly optimistic that profitability will improve in the third quarter.
For international tickets issued in July, the Level 19 fuel surcharge will take effect. That is eight levels lower than June's Level 27 and 14 levels below the maximum Level 33 imposed in May.
Fuel surcharges are added to ticket prices when jet fuel costs exceed a certain threshold and are adjusted on a scale from Level 1 to Level 33 based on the prices. Lower fuel surcharges reduce travel costs for passengers just as the busy vacation season begins.
At Korean Air, for example, round-trip fuel surcharges on U.S. routes such as New York and Atlanta were pushed as high as 1.13 million won ($730) when surcharges reached the maximum level in May. With the reduction to Level 19 in July, the same surcharges have fallen to 688,000 won — saving passengers more than 400,000 won on round-trip long-haul tickets.
Some industry observers expect fuel surcharges to fall further, potentially to Levels 5 or 6, where they stood before the outbreak of the Iran war.
Lower oil prices are also expected to directly improve airlines' earnings because fuel accounts for one of the largest components of operating costs. According to Korean Air's annual report, the airline spent $2.9 billion on jet fuel last year, far exceeding its standalone operating profit of 1.5 trillion won during the same period.
Airplanes are seen at the Incheon International Airport on June 16.NEWS1
Low-cost carriers, which have been particularly hard hit by rising fuel costs, are also seeking to capitalize on the summer travel season by expanding flight schedules.
Rather than adding long-haul routes, however, budget airlines are focusing on short-haul destinations with proven demand, including Japan, China and Southeast Asia, because they remain more vulnerable to fuel costs and fluctuations in the exchange rate.
Jeju Air, Korea's largest low-cost carrier, will increase flights between Incheon and Ulaanbaatar, Mongolia from five to seven per week 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 daily flights to Yantai, a coastal city in China's Shandong Province, beginning Aug. 18.
"Most low-cost carriers are still burdened by high exchange rates and elevated borrowing costs, so they are likely to prioritize risk management over aggressive route expansion," an airline industry spokesperson said.
Ahn Do-hyun, an analyst at Hana Securities, wagered that airline earnings should improve in the third quarter.
"Revenue from higher fares introduced after the Middle East conflict will begin to be fully reflected in third-quarter ticket sales, while the burden from higher fuel costs will ease," Ahn said. "The recent situation has also shown that airlines cannot easily pass rising costs on to passengers on short-haul routes. Future fare increases are therefore 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.
