[Why&Next] Integrated Jin Air to Launch in March 2027... LCC Market Restructuring Begins in Earnest

Transport Ministry and FTC Approve Merger
Shareholders' Meeting and Foreign Approvals Still Pending
Overtakes Jeju Air to Become No. 1 LCC
Experts: "Airfare Increases Unlikely"

With domestic and international regulatory approval for Jin Air's integration of Air Busan and Air Seoul now complete, the launch of the country's largest low-cost carrier (LCC) is just around the corner. Other LCCs are also moving quickly to expand their operations and compete. A major shake-up in the domestic aviation industry is expected as the "integrated Korean Air" prepares to begin full-scale operations next month.

As the number of airlines declines, expectations are growing that competition will ease and profitability will improve. However, fierce competition to secure popular routes is expected to continue. Observers say ongoing oversight is needed to prevent oversupply on specific routes and expand service to new destinations, thereby giving consumers more choices.

"Integrated Jin Air" is set to launch in March next year. On November 12, the Ministry of Land, Infrastructure and Transport said it had approved Jin Air's absorption merger with Air Busan and Air Seoul. The Korea Fair Trade Commission had previously approved the business combination of the three airlines. The companies signed a merger agreement in August and have been taking the necessary steps toward a launch on March 17 next year. Under the plan, Jin Air will remain as the surviving corporation and absorb Air Busan and Air Seoul.

Jin Air has completed reviews by foreign competition authorities, with approval from Vietnam's competition authority last month marking the final one. However, procedures remain, including an inspection of changes to its safety management system, approvals from foreign aviation authorities, and a shareholders' meeting to approve the merger. The company must also report to the Ministry of Land, Infrastructure and Transport every month on whether it is implementing its consumer protection plan.

Set to Overtake Jeju Air as Korea's Largest LCC

With the launch of integrated Jin Air, the leading position in Korea's LCC market will also change hands. As of October, the three airlines had a combined fleet of 60 aircraft: Jin Air had 33, Air Busan 21, and Air Seoul six. This exceeds the 45 aircraft operated by Jeju Air, currently the largest LCC. From January through September this year, the three airlines carried a combined total of 15.64 million passengers, about 54% more than Jeju Air's 10.13 million.

The integration is expected to deliver economies of scale by enabling more efficient management of aircraft and route networks. This is because the airlines can adjust overlapping routes and improve efficiency by consolidating their maintenance and operations systems. Analysts say the integration could mark a turning point in the restructuring of Korea's LCC market, where numerous airlines have competed on a limited number of routes, with larger carriers taking center stage.

Competing airlines are also expanding their operations in response. Jeju Air, the only domestic LCC to own its aircraft, is focusing on modernizing its fleet by introducing next-generation aircraft. Its plan is to reduce costs with more fuel-efficient new aircraft while strengthening its competitiveness on short- and medium-haul routes.

Trinity Airways, which launched in September under its new name after operating as T'way Air, is seeking to expand long-haul routes and differentiate its services through a Selective Service Carrier (SSC) strategy, backed by Sono Trinity Group.

Changes are also expected at Eastar Jet and Air Premia, as VIG Partners, the private equity firm and largest shareholder of Eastar Jet, is exploring an acquisition of Air Premia. If the deal goes through, the two airlines could merge or form a strategic relationship linking their short- and medium-haul and long-haul route networks.

Jin Air B737-800. Jin Air

Will Fierce Competition Ease? What Will It Mean for Consumers?

How the restructuring of the aviation industry will affect consumers is also drawing attention. Economies of scale could improve operational efficiency, but consumers' choices may change as routes and flights currently operated by each airline are reassigned.

However, the merger of the three airlines (Jin Air, Air Busan, and Air Seoul) does not automatically mean greater monopoly power. The Korea Fair Trade Commission approved the business combination, reasoning that the merger would not restrict competition because all three airlines are already affiliates of Hanjin Group. Experts say easing excessive competition among LCCs could improve airlines' operating conditions, while the ultra-low-fare competition felt by consumers may diminish to some extent.

"Bringing together a number of LCCs at a scale that allows them to achieve economies of scale is a desirable direction from the perspective of industry competition," said Lee Yuncheol, vice chairman of the Korea Institute for Industrial Policy Studies. "Excessive competition, which causes airlines' financial performance to deteriorate too sharply, is not desirable in the long term." He added, "The merger of three airlines does not in itself create a monopoly, and since they will continue to compete with other LCCs, a broad-based rise in airfares is unlikely."

"As of the end of last year, the three airlines had combined debt of about 2.5 trillion won," said Lee Hwiyoung, a professor in the Department of Aviation Management at Inha Technical College. "To realize economies of scale through the integration, they need to prevent overlapping flight times and oversupply on specific routes, and develop new routes centered on regional hub airports."

This content was produced with the assistance of AI translation services.