The integrated Jin Air, set to launch in the first quarter of next year, is facing turbulence over its headquarters location. The parent company, Korean Air, and local stakeholders in Busan are at odds, raising concerns about the potential disappearance of regional airlines. Amid political disputes over the headquarters relocation, discussions on securing the integrated low-cost carrier's (LCC) competitiveness have taken a backseat.
According to the aviation industry on the 28th, Korean Air submitted an additional response to lawmaker Kim Mi-ae of the ruling People Power Party regarding the headquarters location of the integrated LCC, following a request from the National Assembly.
In its response, Korean Air proposed a functional division between Seoul and Busan but did not clarify its stance on the headquarters location, stating it is a matter under comprehensive review. While it specified that the final decision-making authority lies with Korean Air and Jin Air, it reportedly avoided providing a timeline for the headquarters decision. In response, Kim criticized Korean Air's reply as disrespectful to Busan citizens and urged the company to disclose the results of its review and the decision schedule by November.
The push for the integrated LCC's headquarters in Busan stems from concerns that the integration process could weaken the local aviation industry. With the construction of the new Gadeokdo Airport underway, advocates argue that a regional airline must take a central role and expand its operations. Busan is citing past commitments from the government and the Korea Development Bank to establish a second hub as a basis for its demand.
Conversely, Korean Air maintains its position for a headquarters in Seoul. The merger agreement signed in August specifies that the headquarters of the surviving entity, Jin Air, will be located in Gangseo-gu, Seoul. Korean Air argues that plans to develop Busan as a second hub are separate from relocating the integrated airline's headquarters.
Previously, on October 16, Korean Air submitted a proposal to the National Assembly outlining plans for the integrated LCC's second hub in Busan, stating it would expand international routes from Gimhae Airport from 28 routes and 281 weekly flights before integration to 33 routes and 339 weekly flights afterward. This plan includes adding four routes to Japan and one to Southeast Asia to support the revitalization of Busan's aviation industry.
Some argue that the autonomy of private enterprises must be respected. According to airport statistics, Incheon and Gimpo airports accounted for 67.4% of all domestic flights from January to September this year, while Gimhae Airport's share was only 12%. This situation is reflected in the operations of Trinity Air and Jeju Air, which have their legal headquarters in Daegu and Jeju, respectively, but maintain their main operational bases near Gimpo Airport.
Korean Air plans to gather opinions from Busan city officials and employees of the three integrated companies by the end of next month. Choi Jeong-ho, Korean Air's vice president, stated during a National Assembly audit on the 7th that it is the company's responsibility to develop Busan as a second hub airport, while also noting that the main operational airports for the integrated Jin Air will be Incheon, Busan, and Gimpo. A shareholders' meeting to approve the merger of the three companies is scheduled for December, which is expected to be a turning point in discussions regarding the headquarters location.
Kim Kwang-ok, a professor at Korea Aerospace University, emphasized that as airlines are private enterprises, the decision on headquarters location should prioritize operational efficiency and future competitiveness over regional interests. He noted that with the integration of three airlines, it is essential to enhance efficiency in route operations, aircraft management, and workforce management, while maximizing economies of scale and scope.
* This article has been translated by AI.
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