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Budget carriers mulling fee hikes

Aug. 14, 2012 - 19:47 By Korea Herald
Low-budget airlines are considering raising fares for domestic flights amid high-flying international crude oil prices and fiercer competition with new players.

According to industry sources, Air Busan, a low-budget carrier affiliated with Asiana Airlines, plans to increase fares of all domestic flights by an average of 9.7 percent from Sept. 1.

Estar Jet had already raised fares 5 percent on average from July 1, while Jeju Air is also continuing discussions with the local government of Jeju Island on price hikes.

Jin Air, an affiliate of Korean Air, which has never raised fares since its establishment in 2008, is also gauging whether to raise fares of flights between Gimpo and Jeju.

Price hikes by budget carriers come after the nation’s top two airlines, Korean Air and Asiana Airlines, announced price hikes on domestic flights recently, their first increase since 2004.

Korean Air and Asiana carried out a new pricing policy charging an average 9.9 percent more than previous domestic fares from July 18 and Aug. 3, respectively.

It has been highly expected that other, smaller low-cost airlines would follow suit as they have maintained fares at about 80 percent of those charged by the two leading airlines.

“With a growing number of low-budget carriers jumping into the market, the business environment has worsened. Price hikes were unavoidable amid heated competition,” said an industry source.

By Lee Ji-yoon (jylee@heraldcorp.com)