Hanjin KAL, the holding company of Korean Air (KE, Seoul Incheon) and its conglomerate parent Hanjin Group, has decided to sell all of the shares it owns in the group’s low-cost carrier Jin Air (LJ, Jeju) to be directly held by the flag carrier, it revealed in a statement on June 13.

The move appears to confirm reports that emerged over a month ago that it is a manoeuvre ahead of Korean Air’s long-awaited merger with Asiana Airlines (OZ, Seoul Incheon), to position a combined low-cost carrier that also integrates Asiana’s Air Busan (BX, Busan) and Air Seoul (RS, Seoul Incheon) under the flag carrier’s direct control.

The assumption is that elevating the flagship airline as a de facto intermediary holding company would enhance the group’s dominance, creating synergies between the carriers by centring on Korean Air. Combining the budget carriers in this way would also resolve any regulatory issues with the merger ahead of time, and it would help optimise the route network by solving...