Korean Job Discussion Forums

[mellinger]

Hey,

Don't know if this is old news, but Korea Air is planning to set up a new low cost carrier here in Korea that would eventually service places in SE Asia. There is an article about it below which it says they plan to start domestic routes in May of this year.

http://asia.news.yahoo.com/080121/4/3dwq6.html

Also, I know that both Tiger Airways and Air Asia really want to reach South Korea eventually too.

How many think these airlines will actually get the permission with Korean Air now wanting to set up a Low Cost Carrier?

-Mike

[articulate_ink]

I'm curious about the long-term viability of LCC units of major legacy airlines. The results have been mixed in other countries. It hasn't worked in the US. Jetstar is doing well for Qantas but that's arguably because they're shifting many of their former mainline flights over to Jetstar to cut costs. This way, they're not undercutting their premium product. Here in Asia, ANA and Thai either have LCC divisions or are about to open them. In Thailand, Nok (which is Thai's LCC arm) has to compete with AirAsia. Here, there's no LCC competition yet. My guess is that Korean Air will have to sort out its own pricing model first. They're exorbitant for international travel, generally, and domestic fares seem to be capped. It's an interesting climate in which to experiment with an LCC. I think they'll make a go of it if they do what Qantas/Jetstar have done and shift some of their short- and medium-haul flying over to Air Korea. The demand for air travel here is high (try getting a seat around the peak travel season) and I think Korean consumers are price-conscious enough to opt for Air Korea if it's got a decent product. Korean Air has excellent service and it's the flag carrier of this uber-nationalistic little country, but its managers have to realize it's not a bargain, either. It could work, but only under the right pricing circumstances. (This is also the case in Japan, with the ANA start-up.)

As far as Tiger's joint venture with the Incheon city government goes, I have no idea what to think. I'm hearing very mixed things about Tiger's operations in both Singapore and Australia. And Incheon itself isn't exactly Paris or Sydney... I'm not sure what it's bringing to the table, apart from money and the requisite percentage of domestic ownership.

Unless AirAsia X faces some kind of last-minute protectionist BS, they'll eat everybody else for lunch, just as they've done everywhere else. I wouldn't be surprised if their first flights out of Cheongju and Busan (the two airports they're supposedly going to serve first) are sold out from the first day of service. This will be interesting to watch.