Jin Air (272450) has postponed the start dates of its new employees, as low-cost carriers (LCCs) take a direct hit from high fuel prices and a weak won amid the Middle East conflict. The move follows the introduction of unpaid leave by T'way Air and Jeju Air (089590), reflecting a broader spread of workforce adjustments across the aviation industry.
According to the aviation industry on Thursday, Jin Air postponed the start dates of about 50 people who were scheduled to join as cabin crew, pushing them to the second half of the year. After selecting about 100 people in its first-half recruitment, Jin Air had brought in about 50 of them first and conducted training. The remaining 50 or so had been scheduled to start on Wednesday, but the company abruptly changed their start date to early October, after the Chuseok holiday, and notified the prospective hires.
Earlier, Jin Air activated an emergency management system immediately after the Middle East war broke out. It indefinitely postponed the safety incentive payments it had paid employees every year, and due to the burden of jet fuel costs, it cut 176 round-trip flights on routes including Guam and Phu Quoc through this month.
Within the industry, applications for unpaid leave to cut costs have also continued. T'way Air and Jeju Air took applications for unpaid leave from cabin crew for two months starting in May and for one month in June, respectively. Aero K introduced unpaid leave for all employees for one month in May.
The aviation industry is known to have recently cut international flights by about 1,000 round trips, led by LCCs. These include 212 flights by Air Busan, 187 by Jeju Air, 150 by Eastar Jet, 131 by Jin Air, and 73 by Air Premia. If the scale of route cuts expands, further workforce adjustments appear inevitable.
The average price of Singapore jet fuel (MOPS) for March 16 to April 15, which serves as the basis for the May fuel surcharge, was 511.21 cents per gallon, surging to 2.5 times the pre-war level (January 16 to February 15). Airlines applied the fuel surcharge at the maximum applicable level, Stage 33 (470 cents or more per gallon). However, unable to recover the soaring fuel costs, they are accumulating losses the more they fly. Falling travel demand due to high fuel prices is also a burden for airlines.
The impact of the weak won, which is driving up dollar-based expenses such as aircraft lease fees, airport usage fees, and repair parts costs, is also deepening the deterioration in profitability across the aviation industry. In particular, LCCs tend to have a larger share of leased aircraft than full-service carriers (FSCs).
"Airlines are making every effort to cut costs through flight reductions and unpaid leave, but if business conditions do not recover, there are limits to how long they can hold out," an industry official said.
