The board of South Korean airline Asiana has given the go-ahead for the formation of a new budget airline, despite opposition from a number of rival carriers.
In a Korean Stock Exchange filing, Asiana said it would pump KRW15 billion (USD13.6 million) in to the new venture with KRW500 million (USD454,133) to be used as initial startup costs.
The new carrier will be called Seoul Air.
Although still awaiting regulatory approval, it hopes to have the new airline up and running by the end of the year.
Seoul Air CEO, Ryu Kwang-hee said it will likely take over some of Asiana’s short haul international routes from Seoul Incheon.
It has generated opposition from low cost rivals T’way Air, Jeju Air and Eastar Jet who have lobbied the South Korean Ministry of Land, Infrastructure and Transport not to approve the new startup.
They contend the already saturated low cost market cannot afford another competitor.
“The government should not give permission to the new air transportation business operator as it is expected to weaken the domestic air carriers’ competitiveness,” they said in a jointly signed letter to regulators.
