South Korean low-cost airlines felt the impact of rising costs in the second quarter, with two of them posting losses for the first time since 2022.

Jeju Air and T’way Air both reported operating losses for the three months to June 30, while Jin Air posted a small quarterly profit, despite an increase in revenue due to strong demand for passenger travel.

The airlines blamed rising costs – particularly fuel and personnel – and currency losses for their poor performance. Jin Air warned that competition was “likely to intensify” in the coming months.

For the second quarter, Jeju Air reported an operating loss of W6.9 billion (US$7 million), compared with a profit of W23 billion in the same period last year.

The airline reported a 16% increase in revenue to W428 billion, driven by a 13.6% increase in passenger traffic. Jeju Air also reported a 15% increase in ancillary revenue during the quarter.

However, operating costs rose more than revenue growth. The airline pointed out that the “burden of foreign exchange costs” had also increased due to the weaker Korean won against the US dollar.

The airline last reported an operating loss in the second quarter of 2022, when some Covid-19 restrictions were still in place in South Korea.

T’way Air reported an operating loss of W22 billion. In the same period last year, the airline had made a profit of W19.6 billion.

Like its competitors, T’way increased its quarterly revenue, with international passenger traffic recording the strongest growth. The airline reported a 13.9 percent increase in revenue to 3.2 trillion Western Pacific dollars.

“Profitability declined due to cost pressures, including labor costs,” adds T’way.

Meanwhile, Jin Air saw its profit fall 95% to W900 million in the second quarter, despite revenues rising 19% to W308 billion. Costs rose 26% to W307 billion.

Korean Air’s sister airline reported a 22% increase in international passenger traffic, offset by a 9% decline in domestic traffic. International capacity also grew by 19% year-on-year.

The airline has expressed concerns about a looming recession as well as “increasing external volatility”, particularly in exchange rates and fuel costs.

To this end, Jin Air says it wants to “promote” cost reductions and increase operational efficiency through the use of newer aircraft.

Jin expects the company’s performance to recover in the third quarter as the peak summer travel season and holiday season are in full swing.