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Operation of new budget airlines delayed amid prolonged pandemic

Transport Ministry‘s new move allows Air Premia, Aero K to fly inaugural flights by end of year

Aero K‘s airplane sits grounded in Cheongju, North Chungcheong Province. (Aero K)
Aero K‘s airplane sits grounded in Cheongju, North Chungcheong Province. (Aero K)
Newly-launched South Korean low-cost carriers Air Premia and Aero K have been given an extended time frame by the Transport Ministry to begin the operation of their service amid the ongoing coronavirus pandemic.

In a statement on Wednesday, the Ministry of Land, Infrastructure and Transport said the two airlines can fly their first flights by the end of this year in order to retain their operating license, pushing back the date from early March to December.

The move, approved by an advisory council consisting of legal, finance and aviation experts, will give both airlines a business choice to make sometime this year based on the level of air travel demand following the vaccine rollout.

“As airlines can now ensure enough time before their inaugural flight, we hope the new move can help them in securing and expanding capital,” one official at the transport ministry said.

Under the new timeline, airlines will be put under strict scrutiny over “meeting pre-requisites and financial solvency,” the official said.

Air Premia and Aero K were given a license required to fly in 2019 with a two-year time frame within which the airlines had to apply for an air operator certificate as well as beginning their operation.

Plans have now been derailed, however, due to issues related to the pandemic.

The Transport Ministry said Boeing’s decision to shut down part of its production and the need for aircraft maintenance has delayed the process of procuring airplanes for Air Premia, pushing the date from last July to sometime later this month.

In the case of Aero K, which obtained an AOC in December and was given the green-light to fly the Cheongju-Jeju route, a “decline in travel demand caused by the coronavirus pandemic” and its “financial conditions” have complicated the situation, the ministry said.

A source close to the matter told The Korea Herald that the prolonged process of obtaining an AOC and lack of government subsidies dealt a further blow to the Cheongju-based budget airline.

“The AOC process for Aero K took too long while new airlines weren’t given help from the government, weakening their capital base.”

“Billions of won” were spent on maintaining a grounded aircraft and employing staff, the source added.

Launched in 2016, Aero K enjoyed wide media coverage last year after unveiling its gender-neutral uniform and promoting progressive values in an industry that has been criticized over its “hierarchical organizational culture.”

During an interview with The Korea Herald last year, Aero K CEO Mike Kang said, “We wanted to start an LCC that adopts a global best practice and yet base ourselves in Cheongju,”

But the prolonged pandemic means there are no international flights taking off from Cheongju Airport even one year into the pandemic.

The airline is currently seeking a paid-in capital increase.

By Yim Hyun-su (hyunsu@heraldcorp.com)
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