AirAsia Korea (Seoul Incheon) and its future launch plans have been thrown into doubt after the South Korean Ministry of Land, Infrastructure and Transport (MLIT) issued a decree last week prohibiting local airlines from setting up low-cost joint-venture operations with foreign carriers.
Aviation International News says the MLIT was responding to pressure from local LCCs including Air Busan (BX, Busan), Eastar Jet (ZE, Seoul Gimpo), Jeju Air (7C, Jeju), Jin Air (LJ, Jeju) and t'way Air (TW, Daegu), to protect the local budget carrier market.
“Korean carriers are very conservative and protective of the local market and they feel that any encroachment by a foreign carrier would not only be unfair but also crowd it,” MLIT senior official, Kim Jung Rak, told the publication.
Following an unsuccessful bid to acquire T'Way Air in 2012, AirAsia (AK, Kuala Lumpur International) again attempted to gain access to the Korean market in December 2013 when it filed an application with the MLIT to establish AirAsia Korea - a joint venture between the Malaysian carrier (25% shareholding) and an undisclosed group of local Korean investors (75%).
This is not the first time foreign investors have been thwarted by the country's regulatory authorities and powerful airline cabal.
In 2008, a bid by Tigerair (Singapore Changi) to establish a joint-venture with Incheon City Municipal collapsed when the start-up failed to secure its Air Operators Certificate after Seoul bowed to pressure from local airlines and dithered on its issuance.
