By Kim Rahn
Staff Reporter
Korean carriers are jittery over Incheon City's move to set up a budget carrier jointly with Tiger Airways, claiming the Singaporean airline will likely encroach on Korea's domestic air travel market.
They claim the joint operation will infringe on Korea's sovereignty in aviation.
The western coastal city established Incheon-Tiger Airways at the end of last month. The city government and the Singaporean low cost carrier each have 49 percent of the airline company's shares, while Incheon Transit Corp., a city-run firm, has the remaining 2 percent.
The new carrier plans to apply for a license to the Ministry of Construction and Transportation around June, and start operations in November on domestic routes first.
According to the Aviation Law, a corporation cannot register for the aviation business if a foreign government, organization, or company has more than half of its shares.
As Tiger Airways has 49 percent of the shares, the foreign firm technically owns less than half of the shares. However, other carriers claim it virtually holds the main rights for management and operation, thus violating the law.
They claim Incheon City is just an investor without experience in airline management, while Tiger Airways will control major parts of the business including finance, marketing, aircraft purchase, operation and maintenance.
``It will be abandoning the nation's sovereignty in aviation if the government allows the establishment of Incheon-Tiger Airways and its domestic and international operations, even though it is a virtual foreign carrier,'' a Korean Air official said.
An Asiana Airlines official also said, ``There are concerns that Tiger Airways, a foreign firm, may have influence on the distribution of air routes and take over Korea's aviation network.''
However, Incheon City said the establishment of the airline has no legal problem.
``We are well aware of the `half of shares' rule, so we took 51 percent, as the transit corporation belongs to the city. We are the major shareholder and we'll have more voting rights,'' a city official said on condition of anonymity.
``We, a local authority, may have some trouble as we don't have airline management experience. But we'll make up for the weak point by taking advantage of Tiger Airways' know-how on business plan and management,'' he said.
The ministry plans to decide whether to issue the license to the new carrier after carefully examining how Tiger Airways would take part in the business. ``We are closely watching the case as it is the first joint business between a foreign carrier and a local authority,'' a ministry official said.