South Korea’s airline industry is facing one of its most turbulent periods in recent memory, as a perfect storm of surging jet fuel prices, a volatile exchange rate, and geopolitical conflict in the Middle East pushes both major and low-cost carriers (LCCs) into crisis mode. The financial fallout is forcing urgent cost-cutting measures, emergency management declarations, and creative—sometimes desperate—attempts to keep planes in the air and balance sheets afloat.
For 티웨이항공 (T’way Air), the situation is particularly acute. On April 15, 2026, the carrier began accepting applications for unpaid leave from all cabin crew scheduled to work in May and June. It’s the first time in a year and a half that such a measure has been taken, the last instance dating back to August 2024. The move is a direct response to two consecutive years of losses, driven by aggressive investments in long-haul routes and the mounting economic strain caused by ongoing conflict in the Middle East.
According to 머니투데이방송 MTN, 티웨이항공’s challenges are emblematic of the broader LCC sector, which is being battered by external shocks. The airline’s debt ratio soared from 1,798.90% at the end of 2024 to a staggering 3,498.63% at the close of 2025—the highest among domestic low-cost competitors. For context, 제주항공’s debt ratio stood at 754%, 진에어’s at 423%, and 에어부산’s at 801% in the same period. Industry analysts attribute 티웨이항공’s sharp increase to significant aircraft investments for long-haul expansion and the compounding effect of accumulated deficits.
Yet 티웨이항공 maintains that its financial status is not as dire as the numbers might suggest. A company official explained, “Because of the nature of the airline industry, aircraft lease fees are recognized as debt in accounting, which makes debt ratios appear relatively high compared to other industries. However, our financial status is being managed stably.” The airline further emphasized that unpaid leave is voluntary and designed to preserve staffing during peak travel seasons while scaling back during off-peak periods—a move intended to boost both operational efficiency and flight safety.
Still, the industry’s perspective is more cautious. One analyst told 투데이신문, “티웨이항공 has rapidly increased its share of long-haul flights at a time of high fuel prices, which likely caused its cost burden to rise sharply. With limited experience in these routes and external variables piling up, the pressure has only grown.” The airline’s foray into long-haul operations began in December 2022 with the Incheon-Sydney route, followed by an expansion into European destinations in 2024. While these moves were meant to diversify revenue, long-haul routes are notorious for their high fuel consumption and unpredictable profitability, making them a risky bet in uncertain times.
Meanwhile, the entire low-cost carrier sector is scrambling to cut costs and adapt. 진에어, another major player, has indefinitely postponed the payment of safety incentive bonuses that were originally promised to all employees. Across the industry, LCCs are slashing flights—especially on medium-haul routes—as the price of jet fuel has shot past $200 per barrel. The impact of the Middle East war has been immediate and severe: in the month following the conflict’s outbreak, international flight cancellations jumped by 26% compared to the previous month.
The turbulence is not limited to LCCs. 대한항공 (Korean Air), South Korea’s flagship carrier, is also feeling the heat. On March 31, 2026, the company declared a company-wide emergency management system, effective from April. Within just ten days, 대한항공 issued two rounds of private placement corporate bonds: 500 billion KRW on April 10 (via KB Securities) and another 100 billion KRW on April 13 (via NH Investment & Securities), both with a three-year maturity and an interest rate of 4.309%. Notably, these bonds included a ‘mandatory redemption clause’—a provision that typically requires immediate repayment if certain financial ratios deteriorate further. According to Newstope Korea, this marks the first time in over a decade that 대한항공 has attached such a condition to its private debt, a sign of just how narrow the company’s financing options have become.
The reasons for 대한항공’s financial strain are manifold. In March 2026, the airline reacquired 대한항공씨앤디서비스 (C&D) for 750 billion KRW, taking on an additional 710 billion KRW in debt guarantees. As of the end of 2025, the company’s consolidated debt ratio had climbed to 339.9%, with its net debt ratio rising sharply from 114.2% to 147.5%. The dual pressures of a global fuel price spike—jet fuel prices in Singapore have more than doubled since the onset of the Middle East conflict, which was triggered by a U.S. airstrike on Iran in February—and a weakening won have only compounded the burden.
In response, 대한항공 has expanded its annual bond issuance limit to 2 trillion KRW and is proactively seeking funds through multiple channels. Still, with the full integration of 아시아나항공 (Asiana Airlines) scheduled for December and a major aircraft procurement plan looming, the company’s financial pressures are unlikely to ease anytime soon.
Across the board, airlines are bracing for even tougher months ahead. While strong passenger numbers in the first quarter provided a temporary reprieve, the outlook for the second quarter is bleak. Fixed costs are rising, demand is softening, and the specter of even higher fuel surcharges looms large. The industry expects May’s international flight fuel surcharge—due to be announced on April 16—to hit its maximum level of 33 steps, piling even more costs onto already stretched carriers. Should peace talks between the U.S. and Iran break down, there’s every reason to believe these surcharges could stay elevated for the foreseeable future.
Despite these daunting headwinds, airlines are not standing still. Even as they operate flights at a loss, LCCs are locked in a fierce discount battle to attract customers and shore up market share. The strategy, according to industry insiders, is to focus on stable management and selectively secure overseas routes that promise long-term growth. As one aviation management professor told MTN, “Large airlines have some flexibility thanks to hedging, but low-cost carriers are much more vulnerable to external shocks and may have no choice but to consider restructuring.”
In the end, the fate of South Korea’s airline industry may hinge on factors far beyond its control: the price of oil, the value of the won, and the unpredictable winds of global politics. For now, carriers are doing what they can—cutting costs, raising funds, and hoping for calmer skies ahead.