Asiana Airlines (OZ, Seoul Incheon) says its board of directors has given the go-ahead for the establishment of a new budget carrier, tentatively entitled Air Seoul (RS, Seoul Incheon), despite strong opposition from rival airlines.
In a filing to the Korean Stock Exchange, Asiana said it would capitalize Seoul Air with at least KRW15 billion (USD13.6 million) with KRW500 million (USD454,133) to be used as initial investments.
Though certification has yet to commence, Asiana does plan to have Seoul Air up and running by the end of the year. Seoul Air CEO, Ryu Kwang-hee, told the Korean Times in an interview earlier this month that the carrier would operate out of Seoul Incheon plying Asiana's short-haul international routes that are currently unprofitable.
However, the project has encountered stiff resistance with t'way Air, Jeju Air and Eastar Jet collectively writing to the South Korean Ministry of Land, Infrastructure and Transport (MLITT) to urge the government not to approve Seoul Air's establishment.
In their letter, seen by the Yonhap news agency, the carriers contend that Seoul Air will only serve to further crowd an already saturated domestic and international market.
"(The government) should not give permission to the new air transportation business operator as it is expected to weaken the domestic air carriers' competitiveness," the LCC's CEOs said in their joint petition. "Approval will only protect the interests of large commercial airlines, rather than expanding options for consumers."
While Asiana has dismissed their concerns claiming Seoul Air will increase the size of the budget market, the MLITT, for its part, has refused to comment save to say that it would review the start-up's potential market impact only once a finalized business plan has been submitted.
Asiana already operates an LCC in which it holds a minority stake - Air Busan (BX, Busan) - which specializes in flights to regional Asian destinations from its Busan hub.
