Korean Airs Budget Service Legally Unavailable

A planned low-cost airline by Korean Air Co., the country's No. 1 air carrier, would be allowed to offer international services immediately if it remained part of the company and was not independent, a government official said Thursday.

Korean Air's plan to launch a new international low-budget flight carrier, tentatively named Air Korea, by May 2008 hit a snag Wednesday, when the Transportation Ministry announced a new license regulation for start-up airlines, requiring all new airlines to operate domestic flights for at least two years before being given approval to offer flights to overseas.

Korean Air has announced that Air Korea would be set up as an independent company, financed by Korean Air.

"We could immediately approve international services of Air Korea only if it remains a part of Korean Air's own business," said a ministry official requesting anonymity.

If Korean Air decides to keep the low-budget operation under its wing, it would be a financial burden to the company, as it plans to keep salaries at Air Korea at about 60 to 70 percent of the salaries of those working for Korean Air.

The decision would also go against the company's policy of maintaining a premium brand image for Korean Air.

"Korean Air operating low budget flights doesn't suit the company's aim of becoming a global luxury airline," said a company spokesman.