Asiana Airlines (OZ, Seoul Incheon) says its second Low Cost Carrier, tentatively named Air Seoul (RS, Seoul Incheon), will launch later this year and will focus exclusively on the international market.
The former senior managing director and head of Asiana Airlines’ passenger division, now CEO of Seoul Air, Ryu Kwang-hee, told the Korean Times in an interview that the carrier would operate out of Seoul Incheon plying Asiana's short-haul routes that are currently unprofitable.
“With the establishment of Seoul Air, improved earnings are expected as the LCC can increase its margin by operating those routes showing low profit on the full-service carrier,” he said.
Earlier this year, Asiana officials identified smaller cities in the Japanese market as possible destinations where Seoul Air would be able to make an impact. Asiana has struggled with low occupancy rates on those routes thanks in large part to competition from the likes of fellow South Korean LCCs Jeju Air, Jin Air, t'way Air, and Eastar Jet.
Ryu allayed fears that the new carrier's entry would inevitably clash with Asiana's existing LCC brand, Air Busan (BX, Busan), stating that their route network's would be mutually exclusive.
“All of Air Busan’s flights are to or from Busan, and Asiana doesn’t operate any of those routes, which means the new LCC’s routes won’t clash with Air Busan’s,” he said.
Unlike Air Busan where it holds a minority 46% shareholding, Asiana will hold a majority stake in Seoul Air thereby allowing it to manage the LCC according to Asiana's requirements. In addition, Seoul Air will also have access to Asiana's expertise and resources.
The launch of Seoul Air will mark a year of significant changes at Asiana with reports private equity firm MBK Partners, securities brokerage IBK Securities Co, and construction outfit, Hoban Construction Co, all eyeing a 57.5% stake in Asiana's parent, Kumho Industrial Co Ltd. Kumho owns a 30.1% shareholding in the airline.
