Jeju Air Co., a leading low-cost carrier in South Korea, is exploring potential mergers and acquisitions to bolster its position in the domestic budget airline market. CEO Kim E-bae has indicated interest in acquiring an LCC owned by private equity firms, as reported by industry sources on Friday.
Three companies in the LCC sector are currently owned by private equity firms, namely Air Premia Inc., Eastar Jet Co., and Air Incheon Co. Air Premia, known for its long-haul routes, is owned by Seoul-based PEFs AP Holdings and JC Partners. Meanwhile, Eastar Jet, which primarily operates short-distance routes, was acquired by VIG Partners for 140 billion won (US$102 million) last year.
Jeju Air’s potential acquisition of Air Incheon seems unlikely, as the airline focuses on cargo transport. However, the airline’s interest in Air Premia could yield significant synergies, leveraging Air Premia’s long-distance operations with Jeju Air’s existing short-haul routes.
Jeju Air has maintained market leadership since its inception in 2005 but faces growing competition from the merger of Korean Air Lines Co.’s Jin Air Co. and Asiana Airlines’ Air Busan Co. and Air Seoul Co. This merger could result in a combined fleet of 58 aircraft and annual sales of 2.48 trillion won (US$1.81 billion), surpassing Jeju Air’s current capacity.
In response to increasing competition, Jeju Air is actively pursuing strategic opportunities to sustain its market dominance and expand its reach in the ever-evolving LCC industry.
