Korean Air Enters Emergency Mode Over Fuel Costs

Korean Air Co., South Korea's flag carrier, will enter emergency management mode this week in response to rising fuel costs and other worsening external conditions, according to multiple sources.

The decision was announced by Korean Air Vice Chairman Woo Kee-hong in an internal notice. The airline plans to implement phased response measures starting Wednesday to improve cost efficiency and offset surging fuel costs driven by the ongoing Middle East conflict, as reported by UPI. According to Reuters, the airline expects fuel costs for April to rise significantly, with fares on major routes increasing by over 200%. The memo added that if high oil prices persist, it expects significant disruption to its annual business targets.

The broader airline industry is facing growing pressure as jet fuel costs surge and the Korean won continues to depreciate against the U.S. dollar. Several low-cost carriers, including Jin Air Co. and Air Busan Co., plan to reduce flights starting in April to minimize losses, according to UPI. Industry watchers predict more airlines may follow suit if the Middle East conflict persists.

The cost of crude oil has surged by more than 50% since the conflict began on February 28, while global jet fuel prices have more than doubled. Airlines have adopted similar emergency protocols to protect their businesses during crises like the Covid-19 pandemic, said Tan Chi Siang from consultancy PwC Singapore, as reported by BBC. South Korea is especially vulnerable to energy supply disruptions from the Middle East as it heavily relies on oil from the Gulf.

The measures are typically internal, such as slowing upgrades or other investments. However, some airlines may reduce the number of flights to cut costs. Asiana Airlines Inc., the country's second-largest carrier and a Korean Air subsidiary, also entered emergency management mode last week, according to UPI. The broader airline industry is facing growing pressure as jet fuel costs surge.