Parata Air introduces high-speed Wi-Fi.
T’way and Air Premia upgrade their premium services.
Domestic low-cost carriers (LCCs) are drawing attention for expanding premium services, such as introducing in-flight high-speed Wi-Fi and increasing the number of long-haul routes to the Americas and Europe. This is seen as a niche strategy to preemptively capture demand for long-haul and premium services by filling the niche left by the disappearance of Asiana Airlines, which is set to merge with Korean Air at the end of this year.
Parata Air recently announced that it has signed a contract with Panasonic Avionics, a global aviation entertainment company, to introduce in-flight high-speed Wi-Fi. It plans to sequentially install Low Earth Orbit (LEO) satellite-based communication systems on its three A330-200 aircraft. In line with the launch of routes serving the Americas next year, it plans to offer free in-light Wi-Fi to passengers in the upper-tier ‘Business Smart Class.’ Among Korea’s domestic low-cost carriers (LCCs), only Jin Air and Air Premia currently offer in-flight Wi-Fi.
The trend of existing LCCs moving away from being LCCs is also accelerating. T’way Air recently changed its name to ‘Trinity Airlines’ and declared a Select Service Carrier (SSC) model. The strategy is to maintain low-fare competitiveness on short-haul routes, while significantly introducing services comparable to major airlines, such as lounges, in-flight meals, and in-flight Wi-Fi, on long-haul routes to Europe and Australia.
Air Premia also recently announced a strategy to advance its Hybrid Service Carrier (HSC) capabilities. It is widening the pitch of some economy seats from 31 inches to 33 inches and expanding the one-hour free Wi-Fi service, currently available on only three aircraft, to all aircraft in the future.
However, strategies to expand long-haul and premium services require massive upfront investment, which inevitably places a significant burden on the short-term profitability of LCCs. In fact, Air Premia turned to a deficit last year, posting an operating loss of KRW 32.1 billion, while T’way Air (Trinity Airways) also recorded an operating loss of KRW 182.5 billion in the second quarter of this year. Furthermore, Parata Air is in a state of complete capital impairment, recording a net loss of KRW 32.6 billion in the first quarter of this year.
The reason why airlines are focusing on premium services is the market restructuring following the merger of Korean Air and Asiana Airlines at the end of the year. The integrated Jin Air (Jin Air, Air Seoul and Air Busan), set to launch next March, is expected to be reborn as a ‘Mega LCC’ of overwhelming size, making survival itself difficult without a differentiation strategy.
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