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| An Asiana Airlines plane is seen at Gimpo International Airport in Seoul, Nov. 16. Korea Times photo by Shim Hyun-chul |
By Nam Hyun-woo
Korean Air's takeover of Asiana Airlines is drawing attention to how the low-cost carrier (LCC) affiliates of the two will be integrated, with industry officials anticipating a merger of the LCCs that will be given the brand name Asiana.
Korean Air submitted documents regarding the acquisition to the competition authorities in Korea and seven other countries last week to complete the takeover of Asiana and finish integration by 2023.
To do this, the airline plans to draw up an integration plan by March 17, which is anticipated to include details on how it will handle its affiliate Jin Air, and Asiana Airlines' Air Busan and Air Seoul.
Unlike the integration plan for the two full-service carriers, neither Korean Air nor the state-run Korea Development Bank (KDB), which is financing the acquisition through Korean Air's parent company, have revealed details on how they will deal with the LCCs, except that they will be merged into a single entity.
During a press conference last month, Korean Air co-CEO Woo Kee-hong said "launching a new brand is inappropriate due to time and cost, thus there should be a single brand, and we will consider how to use another brand that we are not using."
This has been interpreted as the combined Korean Air and Asiana Airlines using the former's name, while the merged LCCs may use the Asiana brand.
Asiana has been widely anticipated as the new brand for the integrated LCC because of its reputation in the global market. Given the airline built its reputation on its strength in short and medium-haul international flights, passing down the brand image to the integrated LCC could be a reasonable choice, industry officials said. They added that having a new name would be better than adopting the name of one of the three LCCs after integration in terms of preventing conflict between them.
However, some are opposed to the use of Asiana.
Reportedly, some Jin Air employees are expressing opposition, because their company, which is the biggest among the three LCCs, will likely absorb the others during the integration, and using Asiana will remove their corporate identity.
Busan's city government however, is opposed to a Jin Air-centric integration.
The city and Busan Chamber of Commerce and Industry claim that if Air Busan, which is headquartered at Gimhae International Airport near the city, is absorbed into Jin Air, there will be an impact on the local economy. Thus, Air Busan should play the central role in the integration and it should be headquartered in a new airport the city is hoping to build on the nearby island of Gadeok.
Despite the hopes of Busan city, analysts are expecting Jin Air will likely be the centerpiece of the integration.
"When the three firms are merged, Jin Air, which is the largest among them, will likely play the central role," Hi Investment & Securities analyst Ha Joon-young said. "Based on 2019 data, the integrated LCC will have a 38.5 percent market share in international flights operated by domestic LLCs, becoming a top player."
