The merger of Korean Air and Asiana Airlines will also kick off the integration of the low-cost carriers (LCC) under the two airlines. Korean Air plans to launch a merged Jin Air by combining its LCC Jin Air with Asiana's LCC Air Seoul and AIR BUSAN. However, the local community in Busan is strongly opposed to AIR BUSAN being absorbed by Jin Air, leading to expected difficulties in the integration.
According to the aviation industry on the 10th, AIR BUSAN is set to hold an extraordinary general meeting on the 16th to appoint Korean Air executives to its board of directors. It was proposed to appoint Jeong Byeong-seob, the executive managing passenger sales at Korean Air, as an inside director, and to appoint Song Myeong-ik, the executive managing the corporate integration task force at Korean Air, as an inside director, while appointing Seo Sang-hoon, the executive managing financial controls at Korean Air, as an outside non-executive director. As of the end of September last year, the board of directors of AIR BUSAN was composed of 2 inside directors, 2 outside directors, 3 other non-executive directors, and 1 executive director.
Korean Air has reportedly decided that the integrated brand name for Jin Air, Air Seoul, and AIR BUSAN will be Jin Air, and plans to base it at Incheon International Airport. The merged Jin Air will have 58 aircraft, allowing it to quickly become the number one LCC in the country.
The key issue is the strong opposition from the city of Busan and the local community, which holds equity in AIR BUSAN. Jin Air and Air Seoul are fully owned by their largest shareholder, Korean Air and Asiana Airlines, respectively. In contrast, as of the end of last year, Asiana, the largest shareholder of AIR BUSAN, owned 41.89% of the shares. The city of Busan and companies based in Busan own about 16% of AIR BUSAN's equity. When AIR BUSAN was established in 2008, some local companies in Busan participated in the initial investment, and in 2022, when its financial situation worsened due to COVID-19, the city of Busan injected 10 billion won into a capital increase. Essentially, AIR BUSAN has been a part of the Busan local community from its inception.
The Busan local community believes that if AIR BUSAN is included in the integrated LCC, it will lose its regional hub airline. To grow the new airport set to open in 2029 at Gadeokdo, a regional hub airline is needed, and without AIR BUSAN, revitalization of the local economy is considered impossible. Some citizen organizations in Busan are advocating for the separate sale of AIR BUSAN or the establishment of an independent airline as alternatives.
It is expected that the city of Busan will propose a plan to attract the headquarters of the merged Jin Air to Busan. Park Hyung-jun, the mayor of Busan, recently stated in an interview, 'After reviewing various options to maintain a regional hub airline, attracting the headquarters of the integrated LCC (to Busan) is deemed the most realistic alternative.' Mayor Park noted that he has completed practical discussions with Korean Air and plans to discuss with decision-makers soon, but he pointed out that Korean Air characterized the discussion process as an issue they cannot confirm.
In the aviation industry, there is a view that attracting the headquarters of the integrated LCC to Busan and separating AIR BUSAN for sale are realistically difficult to pursue considering operational efficiency. In November last year, the Ministry of Land, Infrastructure and Transport stated that the location of the integrated LCC headquarters should be determined autonomously by private corporations depending on their management situation. An industry source explained, 'Given that AIR BUSAN has lucrative routes from Busan and has turned a profit since 2023, the possibility of Korean Air giving that up is low.'