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| Air Premia's Boeing B787-9. / Courtesy of Air Premia |
By Kim Hyun-bin
Despite a record number of passengers in recent years, some local airlines are struggling to stay afloat, with some on the verge of shutting down due to managerial and financial issues.
Air Premia, a budget carrier granted its business license last month, is on the verge of losing it because of an ongoing conflict between management and shareholders.
According to the Ministry of Land, Infrastructure and Transport and the aviation industry, the airline held a board of directors' meeting Friday with shareholders wanting to replace CEO Kim Jong-chul.
Kim and shareholders have been in a dispute over new aircraft.
However, the transport ministry could revoke the airline's business license because any change in CEO could hinder the execution of its business plan.
"The change in CEO could mean their initial business plan might not be executed and if the transport ministry believes the plan to be lacking substance, they can revoke the business license," an aviation official said.
On March 5, the transport ministry granted three low-cost carriers business licenses under the condition that they abide by their business plans. Any airline found in violation could face the cancellation of their licenses.
"Air Premia sent a request to revise its business license," a transport ministry official said. "When the transport ministry approved the business license last month, it agreed to abide by the business plan it submitted. If there is a change in CEO, it needs to be re-evaluated from the start."
Kim headed the country's leading low-cost carrier Jeju Air from 2009 to 2012 and takes credit for turning the carrier's deficit to a surplus. He led the groundwork in establishing Air Premia, which plans to offer middle to long-haul flights, differentiating its products with other local budget carriers that only offer short to medium-range flights. On April 10, the carrier signed a deal to use three Boeing B787 aircraft by 2020.
Air Pohang struggling to resume operations
Air Pohang Company, a regional airline, has been struggling to resume operations, because it lacks the employees to manage the firm.
In February 2018, Air Pohang began services with two Bombardier 50-seater CRJ-200 aircraft on the Pohang-Gimpo and Pohang-Jeju routes.
However, in December the company announced it would halt operations to replace the old jets with six Boeing B737 jets, which were expected to be brought in stages. The company said it was hard to find parts for the CRJ-200, because production ended in 2007.
The company initially planned to resume operations in April, but faces difficulties because most of its employees resigned in a dispute over wages after Best Airlines took over the carrier from Dong-Hwa Electronics last year.
"Currently, there has been no consultation with us, so we do not know the specifics, but they are not working to resume operations," said a Pohang City Hall official.
Asiana seeks to drop unpopular destinations
Kumho Asiana Group recently decided to sell the country's second-largest carrier to avert a liquidity crisis, and amid the turmoil Asiana Airlines established a task-force seeking to halt services to unpopular destinations.
Russia's Sakhalin, Khabarovsk and some cities in China and Japan are among these destinations.
According to transport ministry data, Asiana Airlines' average seat occupancy out of Incheon International Airport is 84.8 percent. However a few routes have been heavily unprofitable.
Sakhalin had the lowest load rate at 56.8 percent followed by Yanchen at 57.7 percent and Khabarovsk with 63.9 percent, with all flights departing from Incheon.
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Regional airports are even worse with an average load rate of 51.4 percent on the Cheongju-Beijing route, 68.1 percent for Gimhae-Beijing and 69.2 percent for Gimhae-Sunyang.
"Asiana Airlines is looking to enhance its profitability by restructuring its low-profit routes. Low-cost carriers will be looking to expand the routes that Asiana halts," an airline official said.
