New Budget Carrier to Debut in 2009
By Kim Rahn
Another regional budget carrier, ``Busan Airlines,'' is to be launched in 2009 following the signing of a memorandum of understanding (MOU) by the southeastern port city of Busan, the Busan Chamber of Commerce and Industry, and a committee for airline establishment last week.
The committee plans to recruit pilots and staff next year and start regular domestic services in June 2009.
The decision to launch Busan Airlines is the latest in a boom to establish regional carriers in Korea.
Hansung Airlines, based in Cheongju, Chungcheong Province, opened the budget carrier market here, starting operations in August 2005, followed by Jeju Air in June 2006.
The two have put down roots as low cost carriers _ Hansung operates on the Cheongju-Jeju route with an average 85 percent boarding rate, while Jeju Air flies 46 flights per day, recording 640,000 passengers in the year since it launched services.
Two more budget airlines are also preparing for the service _ Busan and Gyeongsang Province-based Yeongnam Air and North Jeolla Province-based JB Airways _ and it is expected that a new air travel era will begin as early as 2009 with major cities nationwide having regional carriers.
Those airlines are targeting the domestic travel market and are expected to provide more convenience to customers.
Busan Airlines plans to establish a corporation within this month, with 50 billion won. Lotte Hotel Busan, Busan Bank, Seun Steel, Dongwon Development, BN Group, Win Steel and Nexen all were of the establishment committee, and Taiwan's Pan Asia Transportation will invest in the company and operate flights.
JB Airways aims to complete contracts for two 50-seat planes soon and start operation this coming December. It will provide services on the Gunsan-Jeju, Gunsan-Ulsan and Ulsan-Jeju routes.
Yeongnam Air recently signed a contract with Dutch company Fokker to buy mid-sized jetliners for its service launch next February. It is training 100 staff including 12 pilots and plans initially to operate on the Busan-Jeju and Daegu-Jeju routes before expanding its service to the Busan-Gimpo and Busan-Incheon routes.
Incheon city is also considering setting up an airline by 2010.
However, concerns have emerged over their costs and safety, as the airline business requires huge sum of money at the startup stage, and it is greatly affected by fuel prices and other economic factors. Low profits from such factors could result in safety problems with aircraft, experts say.
Also, most of the routes the airlines plan to operate are those that big carriers _ Korean Air and Asiana Airlines _ scrapped due to low profits. In addition they will have to spend a considerable amount of money for marketing and recruitment and provide low-priced tickets at the same time.
A Construction and Transportation Ministry official said it is key for budget carriers to have a more than 75 percent boarding rate in order to continue in business.