Jeju Air, Jin Air vying for LCC crown

By Lee Hyo-sik

Choi Kyu-nam, Jeju Air CEO

Choi Jung-ho, Jin Air CEO

Jeju Air and Jin Air are competing to seize the much-coveted crown in Korea’s rapidly growing low-cost carrier (LCC) market.

Jeju Air, the budget carrier owned by mid-tier retail-focused Aekyung Group, has been ahead of Jin Air, the LCC of Korean Air, in sales and fleet size.

However, the latter has been making a series of moves to challenge the former after Emily Cho, the youngest daughter of Korean Air Chairman Cho Yang-ho, was promoted to company vice president in charge of the carriers’ sales and marketing. Cho is widely expected to head Jin Air in the near future, while her older brother Walter Cho will manage the country’s largest flagship carrier.

Jin Air, presently headed by CEO Choi Jung-ho, currently operates 21 planes on 31 domestic and international routes. Last year, it earned 461.3 billion won ($400 million) in sales, up 75.7 percent from 2014, while posting a 29.7 billion won operating profit, up 73 percent.

The budget carrier holds 134.2 billion won in cash and easily cashable assets. It plans to use the money to bolster its marketing activities and lease more airplanes to offer new international routes. In December, it plans to borrow a Boeing 777 plane from Korean Air for flights to Hawaii.

“We have accumulated enough cash to invest in areas that will boost our core competitiveness,” a Jin Air official said. “Jin Air will continue to increase the size of its fleet and fly to new destinations. Moreover, Vice President Cho will upgrade its sales and marketing capability to turn it into Korea’s largest LCC.”

However, Jeju Air, headed by CEO Choi Kyu-nam, vows to maintain its edge over Jin Air and other local LCCs, saying that it will expand investments to put more planes in the air and introduce new international routes beyond China, Japan and Southeast Asia.

“Clearly, we are an LCC leader and will do whatever it takes to widen the gap with our smaller rivals,” a Jeju Air official said. “As in the past, we will continue to lease more planes and begin new routes. We plan to operate 40 planes on 60 routes, generating 1.5 trillion won in sales, by 2020.”

The budget carrier, which runs 24 planes on 31 local and international routes, earned 510.6 billion won in sales last year, up 19.1 percent from 2014. Its operating profit rose 74.2 percent to 29.5 billion won over the same period.

Jeju Air reportedly has about 158 billion won in cash and cashable assets, most of which it plans to spend to improve customer service and lease larger airplanes to fly to new destinations in Asia, the Middle East and Australia.