Korea: Skies get crowded as travel mania spurs 6 budget carriers

South Korea may be small with about a 30th of China’s population. Yet, its skies are about to get more crowded with a sixth budget airline, beating its giant neighbor that boasts two major no-frills carriers. Asiana Airlines Inc.’s fully owned new low-cost unit, Air Seoul Co., is poised to receive a government permit on Wednesday as it takes over some of the short-haul flights that are less profitable for its parent. The latest addition is a sign of surging demand for air travel as more Koreans, spoiled for choice, take advantage of affordable fares for a relaxing vacation in Japan’s hot springs or shopping trips to Hong Kong. While competition is good news for fliers, it may hurt some struggling carriers in a crowded market when oil rebounds and weighs on earnings, said Um Kyung A, an analyst at Shinyoung Securities Co. “In a way, some of the financially unstable ones were saved by the slump in crude oil prices,” Seoul-based Um said. “The problem will come when oil prices start to rise again. That’s when some of these budget carriers may start having financial difficulties.” In 2015, all the five existing carriers reported profit as a 26% slide in oil prices lowered fuel costs. Still, total debt at Eastar Jet and Tway Air Co. is in excess of their assets. Promotional offers show how competition for passengers has driven down fares. <br/>