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Sat, Nov 03, 2007 - Page 10 News List

Incheon wants share of budget aviation market

AFP , SEOUL

South Korea's main aviation gateway Incheon said yesterday it planned to jump into Asia's booming budget aviation market through ties with Tiger Airways of Singapore.

The city plans to use the major international airport 40km west of Seoul as a base for low-cost international and domestic flights.

"Talks are under way with Tiger Airways on setting up a budget carrier joint venture," said Lee Sang-wook, an official at the city's maritime, airport and distribution bureau.

"It is still unclear when a deal will be done," he said.

Tiger Airways, established in 2004, flies to more than 25 destinations in eight Asia-Pacific countries. Tiger Aviation Group is 49-percent owned by Singapore Airlines.

The Korea Times reported that Incheon would apply to launch a carrier by 2010 after signing a memorandum of understanding with Tiger Airways this month.

With 20 billion won (US$22 million) in capital, the joint venture will be owned 49 percent by Tiger Airways and 51 percent by the city, it said.

Incheon plans to operate domestic routes for about a year and then start flights to Japan and China with five Airbus A320s or Boeing 737s, it said.

The city has yet to win approval from the Ministry of Construction and Transportation, which places tight restrictions on the airline industry.

The ministry has introduced a safety-watch list of carriers with a high risk of accidents.

It plans new regulations that would require airlines to operate domestic routes for at least three years without major accidents before launching international operations.

Incheon officials insisted the government should allow free competition in the budget aviation market, citing "aggressive marketing" by Asian rivals.

Chinese and Southeast Asian low-budget carriers are selling tickets 50 percent cheaper than Korean Air on routes to China, they said.

"The global budget carrier market is growing rapidly. Restrictions will only allow foreign rivals to expand their market share in this region," a city official said on condition of anonymity.

"We are ready to fully meet international standards through thorough preparations," the official said.

Discount carriers now make up 20 percent of the US and European air travel market and are expanding quickly in China and Southeast Asia.

South Korea has two low-budget domestic carriers. Top carrier Korean Air in June announced plans for a budget unit within three years.

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