Korean Air is planning to compete more vigorously against the LCCs that are increasingly moving into Korean’s markets, chairman Walter Cho said.

The Seoul-based carrier has previously “been passive” in its reaction to the rising LCC threat, Cho said during the IATA annual meeting. However, it intends to “take more aggressive action from now on.” He noted there are more routes where Korean Air overlaps with LCCs, and the LCCs are also moving into sectors traditionally dominated by Korean Air, such as long-haul international.

New LCCs are setting up in South Korea, and overseas players are increasing service into this market. One of the proposed new Korean carriers is Air Premia, which intends to fly Boeing 787s out of Korean Air’s hub at Seoul Incheon International Airport. Among Air Premia’s proposed destinations is Los Angeles, which is Korean Air’s most important international market.

Korean is likely to compete more actively on pricing where it overlaps with LCC routes, an airline spokesman said. The airline may also offer customers additional services to make its flights more attractive compared to LCCs.

Cho said competition among the LCCs themselves has also been fierce, which has hurt their financial performance. The forecast for LCCs is worsening further, indicating it could be time for them to strive for more stability, Cho said.  

Korean Air has its own LCC subsidiary, Jin Air. However, regulators imposed growth restrictions last year because of foreign citizenship violations. Cho said the LCC has met the requirements of regulators and is waiting for the restrictions to be lifted. He said the growth hiatus has given Jin Air a good chance to strengthen its structures.

There has also been increasing competition on some of Korean’s long-haul connecting markets. However, Cho said Korean’s expanded alliance with Atlanta-based Delta Air Lines is helping it in the key transpacific market. The airline is “very satisfied” with the results of the joint venture so far and is seeking similar opportunities with other carriers.

Korean Air is making changes in its cabin products. Cho said the airline is planning a seat upgrade program in its widebody fleet, and also intends to install onboard Wi-Fi in its aircraft.

Korean has recently decided to phase out its first-class product on its Airbus A330 and Boeing 787 fleets. The first-class seats themselves will be retained for now and marketed as part of the business-class offering. Simplifying the cabin product will also help reduce crew workload, Cho noted.

The current US-China trade tension has affected Korean Air’s freight business “quite significantly,” Cho said. However, the carrier has traditionally been able to react to such trade tensions by increasing its focus on other markets.

Korean Air hosted the 75th IATA AGM from June 1-3, and during the event Cho was elected to the IATA board of governors.  

Adrian Schofield, adrian.schofield@informa.com