Overview - Hansung Air

Korea's first LCC finds the running tough

Hansung Airlines became Korea's first LCC with its Aug-05 launch of operations. The for-now humble carrier connects its home base of Cheongjeu with the popular resort island of Jeju using ATR-72 turboprop equipment.

The carrier's plan was to start by operating Cheongjeu-Jeju services, increasing frequency on the route and then launching new routes; Seoul Gimpo to Busan, Gimpo-Jeju and Kwangju-Jeju, and even international services between Cheongjeu and Fukuoka in Japan, as it gained scale and passenger appeal. It forecast that its fares – 30% lower than flag carriers Korean Air and Asiana – would be the key to its popularity, resulting in profitability occurring in its second year of operations.

The actual results have not been as forecasted.Lowered prices by the entrenched flag carriers resulted in lower-than-forecast passenger numbers and the carrier was forced to suspend operations between Dec-05 and Feb-06 when it was discovered that its precarious financial situation was resulting in inadequate maintenance performance. This problem was underscored by an embarrassing non-fatal accident that occurred when one of its aircraft was operating with flat tires.

Outlook unpromising in LCC-unfriendly Korea

The company is operational again, but it is not achieving the financial results it anticipated when it launched operations in 2005. It has added a second ATR-72, but it has not reached the scale necessary to be a serious player in the strictly regulated Korean environment.