Jeju Air to Dominate Rival Despite Aviation Crisis
03 March, 2020
Jeju Air, Korea's No. 1 low-cost carrier, on Monday signed a deal to obtain fifth-ranked Eastar Jet at a bargain price amid the current crisis exacerbated by the coronavirus scare.
Jeju Air said in a public observe that it will get a 51.17-percent stake in Eastar Jet for W54.5 billion (US$1=W1,191).
The high cost has plummeted from W69.5 billion when the two carriers signed a memorandum of understanding last December.
"Both sides made concessions and adjusted the purchase price in light of market conditions triggered by the coronavirus outbreak," Jeju Air said, and vowed to "maximize operational efficiency" by slashing overheads and optimizing routes.
The deal may be the first merger in Korea's aviation industry. But industry watchers worry about the future of the brand new carrier since you may still find way too many players engaged in cut-throat competition.
The market appeared to have vast growth potential even until early this past year, but since that time conditions have gotten so very bad that the six low-cost carriers in a joint statement last week begged for emergency funding from the federal government.
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