There have been various researches conducted over the impact of low cost carriers on the existing markets of aviation and it has been found that the low cost carriers so far had yielded a mixed review all over. When some of the conducted researches suggest that the low cost carriers have stimulated the requirements of new demands, other view about the same context have suggested that they impact least on the total demand and influence the turf of legacy carriers or full service. In South Korea though, the question has been raised about whether or not the rise in low cost carriers contribute to the growth of domestic air traffic (Hanaoka, 2018). To find out its impact, following would be an analysis on the tourism development, airport or airline operations and the future of the low cost operations in South Korea. Ever since the Low Cost Carriers have been introduced within the aviation market of South Korea, there have been two types of views and interpretations of the entire perspective about the impacts of the low cost carriers in the overall development of tourism in South Korea. Both of the aspects, that is, the positive and negative impact of the low cost carriers would be described with the perspective of the South Korean aviation market:
Positive impact perspective: As per reports, on the emergence of the Low Cost Carriers have the airlines market have seen a positive change in South Korea. This can be said as the various researchers have found that the new Low Cost Carriers have imposed a positive impact on both the local as well as the economic development of the market of airlines in South Korea. The reports have presented the facts that almost 59 per cent of the Low Cost Carrier passengers are new and the customers who have not travelled otherwise (Bilotkach et al., 2017). It has also been found that out of all this; 37 per cent of the total passengers have switched their airlines from the Full Service Carriers or the FSCs. It has also focused that the fluctuations in the tourism demands due to seasonal air trips also cause one of the major problems in tourism industry. However, reports have found out that Low Cost Carriers even has the potential to solve these problems with offering price incentives, thus reducing the seasonal fluctuations. This is considered to be one of the most positive impacts on the tourism development as a whole as visiting the sub-tropical countries and less visited places gets increased, from the perspective of countries like South Korea.
Figure 2: Seasonal Patterns in 2007
(Source: Khan, Kim & Kim, 2018)
Negative Impact Perspective: There have been many sceptical perspectives about the impact of the new entrants of Low Cost Carriers in the tourism development as a whole. From the perspective of South Korean countries, the scepticism rises mostly because of the concerns regarding the safety concerns and the quality of service or QoS (Khan, Kim & Kim, 2018). When Low Cost Carriers was first being introduced in the Korean tourism market, there was a tendency noticed in the passengers of continuing the use of the legacy carriers and mostly avoided the Low Cost Carriers because of safety and QoS issues. This is because, the initial entrance of Low Cost Carriers made use of the Turbopop aircrafts, which were supposed to be Turbofan aircrafts on account of increasing the fuel efficiency. However, this had resulted in the increasing complaints from the passengers regarding constant noises and occurrences of motion sicknesses. In addition to this, there have been several reported occurrences of accidents that had impacted in the downfall of the ticket sales. There were also other reasons that had fuelled the sceptical thoughts about the Low Cost Carriers and these mostly are the shortage of crew members and pilots and the financial difficulty in the running of a maintenance organization (Pearson et al., 2015). Due to this, there have been many suggestions given by various researchers who suggest that many strategies can be considered if the South Korean tourism market wants to upgrade their tourism market with the utilization of the Low Cost Carriers.
The South Korean Low Cost Carriers have been increasing the market shares in account of acquiring the 10 per cent market shares, and that too under 50 per cent of a much smaller arena in the domestic regions. Thus, there are little consensus as per the impact of the Low Cost Carriers in the South Korean airlines or the airport itself (Roh, Tae & Kim, 2018). Especially, in the case of the Korean Destination of the Jeju Islands, the impact was quite visible enough, more than the other destinations as there have been a couple of Low Cost Carriers operating towards the destination, trying to compete with the already existing major airlines. From a coded data taken from the time scale of January 2000 to December 2009 and over 120 data cases observed, it was found that tourist demand can be considered as the dependent variable and it was found that due to the entry of the Low Cost Carriers, the operations of the airlines was increased by a large margin (Hesse & Rodrigue, 2004).
Figure 1: The market share of flights to Jeju Island (Full Service Carriers vs. Low Cost Carriers)
(Source: Kim, 2015)
Recently, the impact of the Low Cost Carriers have become so influencing that South Korea now hosts 5 Low Cost Carriers and including the partially owned Korean Air, Air Busan and the wholly owned Jin Air (Sun, 2017). The airlines have been operating with twice as much international capacity with the influence of the Low Cost Carriers, the largest being Air Busan. Right now, out of the fice Low Cost Carriers owned by South Korean airways, four of them top the ranks for having the capacity of being redeemed as international Low Cost Carriers. Even the regional comparisons have proved that the Low Cost Carriers in Philippines have accounted for a 30 per cent capacity of the international Low Cost Carriers and 74 per cent of them belong to the national airlines. According to the findings of various researches, it was found that the highest market share belongs to the South Korean Low Cost Carriers up and until 2013 (Han, Hyun & Kim, 2014).
When the above studies focus mostly in the understanding of the impact of Low Cost Carriers in South Korea airlines and economies it also forms a basis of the understanding of the future of the Low Cost Carriers operations in South Korea and its impacts on the airlines and economics of the country (Kim, 2015). This is first and foremost characterized by the indications that the future prospects of the tourism over the unknown destination of the Jeju Islands would be a major pull factor and the demand forecast over the environmental sustainability would possibly become much more in demand than ever before.
Additional tourist destinations to the is most likely to be added in the South Korean airlines given the prospects of Low Cost Carriers and the customer demand rise that it has on the recent times. The demographic profile of the passengers and the tripology is a factor that has a huge potential from the operational perspectives in South Korea where further incentive to the Low Cost Carriers has seen a jump in the market for the past years of researches, where it has been anticipation of the future profits for the South Korean airlines in the international market (Zhang et al., 2017).
References
Bilotkach, V., Kawata, K., Kim, T. S., Park, J., Purwandonok, P., & Yoshida, Y. (2017). Impact of Low-cost Carriers on International Air Passenger Movements to and from Major Airports in Asia, 91-131.
Han, H., Hyun, S. S., & Kim, W. (2014). In-flight service performance and passenger loyalty: A cross-national (China/Korea) study of travelers using low-cost carriers. Journal of Travel & Tourism Marketing, 31(5), 589-609.
Hanaoka, S. (2018). Low-cost Carriers in the Japanese Aviation Market. In Airline Economics in Asia (pp. 9-31). Emerald Publishing Limited.
Hesse, M., & Rodrigue, J. P. (2004). The transport geography of logistics and freight distribution. Journal of transport geography, 12(3), 171-184.
Khan, N. T., Kim, Y. H., & Kim, Y. B. (2018). The dynamic impact of low-cost carriers on full-service carriers and the tourism industry of South Korea: a competitive analysis using the Lotka–Volterra model. Asia Pacific Journal of Tourism Research, 1-11.
Kim, Y. (2015). Assessing the effects of perceived value (utilitarian and hedonic) in LCCs and FSCs: Evidence from South Korea. Journal of Air Transport Management, 49, 17-22.
Pearson, J., O’Connell, J. F., Pitfield, D., & Ryley, T. (2015). The strategic capability of Asian network airlines to compete with low-cost carriers. Journal of air transport management, 47, 1-10.
Roh, S., Tae, S., & Kim, R. (2018). Development of a Streamlined Environmental Life Cycle Costing Model for Buildings in South Korea. Sustainability, 10(6), 1733.
Sun, J. Y. (2017). Airline deregulation and its impacts on air travel demand and airline competition: evidence from Korea. Review of Industrial Organization, 51(3), 343-380.
Zhang, A., Hanaoka, S., Inamura, H., & Ishikura, T. (2017). Low-cost carriers in Asia: Deregulation, regional liberalization and secondary airports. In Low Cost Carriers (pp. 55-69). Routledge.
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