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Korea changes law to support start-ups
August 16th 2019
Excessive competition concerns no longer a factor in licensing decisions. Read More »
Korea has determined the free market should decide the winners and losers in the country’s lively aviation market.
Korea’s National Assembly amended Article 8 of its Aviation Business Act to remove a clause about “excessive competition concerns”. That statement would have allowed regulators to reject start-ups if over-competition was likely to occur from the granting of new air operator certificates (AOC).
For nearly two years, government divisions took different views about Korea granting more airlines permission to launch. Aviation regulator MOLIT upheld the excessive competition concern argument, a viewpoint seen by many as protectionist to incumbents.
Korea’s Fair Trade Commission ultimately prevailed with its argument that innovation from new entrants benefitted consumers and that ultimately the market should decide if all airlines remain or some enter consolidation or exit the market.
MOLIT cited excessive competition when it first rejected start-up Aero K in 2017. In March, Aero K as well as Air Premia and Fly Gangwon received business licenses. They are awaiting their AOCs.
The change was led by Democratic Party member Byun Jae-il of Cheongju, where Aero K plans to launch. Byun said in translated remarks, “The provisions are open to arbitrary judgment and could be exploited as a basis to prevent licensee entry into the market by allowing licensees a wide range of discretion.”
