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How many airlines is too many airlines (on one route)? 5? 7? 10? How about... 16?! Aero K Airlines, a low cost airline in South Korea, launched flights between Seoul Incheon and Tokyo Narita at the end of May. What blew my mind is that, as per OAG schedules, this will be the SIXTEENTH passenger airline scheduled to operate between these cities in 2024! Even if one considers this at the level of the individual airports (GMP/ICN - NRT/HND) and not the cities, its the thirteenth airline flying between Incheon and Narita. There will be an astonishing 67 flights operating (in one direction) between the two cities on Saturday this week. What gives? The South Korean aviation market is something of a unique beast: ☞ 𝐒𝐭𝐫𝐨𝐧𝐠 𝐩𝐞𝐧𝐞𝐭𝐫𝐚𝐭𝐢𝐨𝐧 𝐨𝐟 𝐚𝐯𝐢𝐚𝐭𝐢𝐨𝐧: among the highest trips per capita in Asia ☞ 𝐇𝐢𝐠𝐡 𝐠𝐞𝐨𝐠𝐫𝐚𝐩𝐡𝐢𝐜 𝐜𝐨𝐧𝐜𝐞𝐧𝐭𝐫𝐚𝐭𝐢𝐨𝐧: Seoul, Busan and Jeju account for 97% of all seat capacity ☞ 𝐑𝐚𝐩𝐢𝐝 𝐠𝐫𝐨𝐰𝐭𝐡 𝐚𝐧𝐝 𝐝𝐞𝐜𝐞𝐧𝐭 𝐫𝐞𝐜𝐨𝐯𝐞𝐫𝐲: 2x volumes over a decade pre-COVID, driven by strong LCC expansion. 2023 passenger volumes were back to 90% of 2019 (excl. China and Russia) ☞ 𝐀 𝐥𝐚𝐫𝐠𝐞 𝐧𝐮𝐦𝐛𝐞𝐫 𝐨𝐟 𝐚𝐢𝐫𝐥𝐢𝐧𝐞𝐬...: 10 scheduled carriers at last count ☞ ...𝐬𝐩𝐨𝐫𝐭𝐢𝐧𝐠 𝐚 𝐰𝐢𝐝𝐞 𝐫𝐚𝐧𝐠𝐞 𝐨𝐟 𝐛𝐮𝐬𝐢𝐧𝐞𝐬𝐬 𝐦𝐨𝐝𝐞𝐥𝐬: classical full service carriers such as Korean Air to hybrid Air Premia to LCCs such as Jeju Air ☞ 𝐒𝐨𝐦𝐞 𝐢𝐧𝐜𝐫𝐞𝐝𝐢𝐛𝐥𝐲 𝐛𝐮𝐬𝐲 𝐫𝐨𝐮𝐭𝐞𝐬: The busiest in the world by passenger numbers is the domestic route between Jeju Island and Seoul ☞ 𝐒𝐮𝐫𝐩𝐫𝐢𝐬𝐢𝐧𝐠𝐥𝐲 𝐥𝐢𝐭𝐭𝐥𝐞 𝐜𝐨𝐧𝐬𝐨𝐥𝐢𝐝𝐚𝐭𝐢𝐨𝐧: Historical expectations of mergers often belied, with multiple airlines driven by booming demand somehow co-existing. The upcoming Korean Air-Asiana merger will be the first major such move in South Korea. (There have, as in any market, been airline exits over the years) Coming back to the original question - how many airlines is too many airlines, on one route? That depends on who you ask! 👪 Passengers: The more the merrier to spur competition, keep fares low and provide a variety of options 🏫 Airports and service providers: Happy to have as many airlines as they have capacity to accommodate, with the caveat that the airlines see enough value to continue to serve the airport across seasons and years ✈️ Airlines: Perhaps the only party that wishes there wasn't quite so much competition across the Sea of Japan! The rising tide of demand growth will continue to lift all boats for a while. As that cools, though, carriers will be forced to compete on fare, attractiveness of flight schedules, reliability, service levels, and connectivity. Incheon International Airport Corporation Narita International Airport Corporation Map source: OAG Mapper
The reach that Ethiopian Airlines has in terms of their 5th freedom rights never ceases to amaze me .
Phoenix Fadel
1mo
Very interesting post, thanks Arvind. Well, I think International Air Transport Association (IATA) role is missing here, IATA could organize the space more for the public benefit (everyone) including environment. Plenty of policies and procedures can be taken, at least the intervention can be an advice to help perform even better.
Surendra Gupte
1mo
It's a good question to ask Arvind. If confined to the routes under discussion, off course it would depend on the ability of the players to sustainably operate on the route given adequate slot availability, the geography/topography of markets served, lack of alternate means of transport, levels of disposable income with time factor being of essence to the air passenger and in a free market environment the forces of demand and supply determine the number of players - unless it's instance of either dumping or cross subsidization. It would be interesting to know whether wide body aircrafts in operation on the route and does the situation hold good over a period of time.
Gunawan Wibisono
1mo
Good point! Adding to that is the need of integrating Gen-AI into Digital Capability of every ATS regulator per FIR, doing so not just upgrading adaptation but also enhanced competitiveness per airline.
So interesting to see Ethiopian there doing 5th freedom. I also wonder to what extent ANA suffers self-cannibalization with Peach and Air Japan.
Jefferson Ding
1mo
The question is what seat capacity (widebody or Narrowbody) for this popular demand route?
dont forget that on these routes its often still 747s for a +/- 1 hour flight
And what is the average load factor on those flights? Are they sustainable?
Jefferson Ding
1mo
Well said!
Actionable aviation insights
1moYou mention little consolidation but your graphic seems to group carriers that are in the same holding company or have ties. The market may have 16 carriers, but not 16 competitors. There is some clear segmentation. ANA and JAL only fly Haneda-Gimpo. They do not fly Narita-Incheon, but their LCCs do. This is partially enabled by the quick turn fitting into medium-haul utilization patterns. The weak yen is generating growth. At some point when the yen recovers some ground, there will be a capacity pullback since outbound Japan growth will not fully offset outbound Korea reductions. Even before the yen weakened, it was not unheard of for people to do day trips between Korea and closer Japanese cities like Fukuoka, which has a convenient downtown airport. No signs yet of the market adopting Europe’s conservative mindset around travel’s sustainability.