Airline News
Complaint against Seoul Air, SIA to take stake in Jeju?
March 30th 2015
Competition among South Korea’s carriers is intensifying as three of the country’s five existing budget carriers – Jeju Air, Eastar Jet and T’Way Airlines – last week filed a complaint with the country’s Transportation Ministry to request they reject Asiana Airlines’ plan to launch budget offshoot, Seoul Air. Read More » The three carriers said another market entrant operated by a major airline would threaten their existence. “It will definitely lower other LCCs’ competitiveness if a giant company like Asiana comes into the market and begins a [ticket] price war,” an executive at one of the LCCs told the Korea JoongAng Daily on condition of anonymity. “If competitors are knocked out of the battle, imagine what is going to happen next.”
Slated for service entry “later this year”, Asiana officials have said Seoul Air would pick up some of Asiana’s low-yielding routes to Japan and Southeast Asia. However, opposition to Seoul Air is strong, with many in Korean aviation saying it would provide Asiana Airlines with a competitive advantage in the market, particularly as it operates a low-cost carrier, Air Busan, out of Gimhae International Airport in the southern part of the country. Flag carrier, and Asiana rival, Korean Air, has carved a niche for itself in the budget segment with Jin Air, which will expand to long haul routes this year.
In other news, Singapore Airlines (SIA) is still in talks to buy around 20% of Jeju Air as the latter prepares for a 200 billion won ($180 million) initial public offering (IPO) in its fourth-quarter. Full service carrier, SIA, commenced talks with Jeju parent, Aekyung Group, late last year. Jeju, which operates a fleet of 18 B737-800 aircraft, said it would use any equity investment for expansion of its fleet and network, mainly to Chinese second tier cities.
