South Korean airlines are cutting flights and imposing unpaid leave as soaring jet-fuel prices drive record operating losses [1, 2].
This crisis threatens the stability of the domestic aviation sector, forcing both full-service and low-cost carriers to implement drastic austerity measures to avoid insolvency.
Fuel costs now account for approximately 30% of operating expenses, a figure that has more than doubled [1]. While the average jet-fuel price fell 20% compared with the previous month [1], the cost remains more than twice the pre-war level [2]. These expenses are largely driven by oil price spikes originating in the Middle East [1, 2].
The financial impact is severe. Domestic airlines projected an operating loss of 7,613 billion KRW for the second quarter of 2024 [1]. Annual losses have climbed to over 9,000 billion KRW compared with the previous year [2].
To mitigate these losses, companies have turned to aggressive cost-cutting. Low-cost carriers have reduced approximately 900 flights [1]. Asiana Airlines has doubled its non-operational flight scale [2].
Beyond flight reductions, carriers are utilizing unpaid leave for staff to lower payroll expenses [1, 2]. These measures reflect a desperate attempt to manage a cost structure where fuel is no longer a manageable variable, but a primary driver of record-high losses [1, 2].
“Fuel costs now account for approximately 30% of operating expenses”
The South Korean aviation industry is currently trapped between volatile global energy markets and a rigid cost structure. Because jet-fuel prices remain decoupled from pre-war norms despite short-term dips, the industry's reliance on Middle Eastern oil makes it highly susceptible to geopolitical shocks. The move toward unpaid leave and significant flight cancellations suggests that carriers have exhausted their cash reserves and can no longer absorb fuel premiums through ticket price increases alone.
