South Korea’s largest low-cost carrier Jeju Air’s plan to change its name faces hurdles as minority shareholder Jejudo Island opposes the move ahead of the airline’s debut on the Seoul bourse later this year, according to sources Tuesday.
The Jeju Special Self-Governing Provincial Government, which has a 4.54-percent share in the budget carrier, has raised objections to the rebranding scheme since Jeju Air announced its plan to rebrand itself as AK Jeju Air on Aug. 20, named after its parent AK Holdings.
A Jeju Air aircraft sits at a hangar at Jeju International Airport. (Jeju Air)
“We expressed opposition to the name change and urged the carrier to reconsider the plan for the sake of the people of Jeju who hope to maintain the current name,” an official at the Jeju Special Self-Governing Provincial Office who declined to be named said.
The southern resort island‘s government said the rebranding would fade the firm’s purpose for establishment to offer cheaper airfare to people who reside on Jejudo Island.
It also said Jeju Air violated an agreement signed between the two parties in 2005. It states that the name change can be carried out only after prior consultation.
The renaming plan came the same day Jeju Air said it submitted an application for approval for an initial public offering to the Korea Exchange to be the nation’s first budget carrier to go public.
“Jeju Air will push for the name change in a bid to enhance the brand recognition as Aekyung Group’s core affiliated firm,” the carrier said in a press release.
Shareholders will vote on the name change during an extraordinary meeting on Sept. 23.
Aekyung Group, along with the group’s holding firm AK Holdings and retail subsidiary Aekyung, owns an 86.23-percent stake in the airliner.
The Jeju government has been working closely with the budget carrier since it was first launched in 2005 as a home base and initial investor.
Thanks to Jejudo Island, now a top attraction for tourists from China and Southeast Asia, the low-cost carrier has been aggressively expanding its market share and profit.
“Jeju Air is negotiating the matter with Jejudo Island and the decision will be made during the shareholders meeting next month,” company spokesperson Chung Eun-jeong said.
By Park Han-na (email@example.com