With the merger of Korean Air and Asiana Airlines, the integration of the low-cost carriers (LCC) under both airlines is also set to begin in earnest. Korean Air plans to launch an integrated Jin Air by merging its low-cost carrier Jin Air with Asiana's low-cost carriers AIR BUSAN and Air Seoul. However, the Busan community is strongly opposing the absorption of AIR BUSAN, which is based in Busan, into Jin Air, leading to anticipated difficulties in the integration process.
According to the airline industry on the 10th, AIR BUSAN will hold an extraordinary shareholders' meeting on the 16th to appoint executives from Korean Air to the board. The agenda includes appointing Jeong Byeong-seob, executive director of Korean Air's passenger sales division, Song Myeong-ik, executive director and head of the merger task force at Korean Air, as internal directors, and Seo Sang-hoon, executive director of financial control at Korean Air, as an external director. As of the end of September last year, the AIR BUSAN board consisted of 2 internal directors, 2 external directors, 3 other directors, and 1 executive director.
Korean Air has reportedly decided to adopt Jin Air as the unified brand name for Jin Air, Air Seoul, and AIR BUSAN, with plans to base the integrated Jin Air at Incheon International Airport. The integrated Jin Air will then have a fleet of 58 aircraft, allowing it to rise to the position of the number one domestic LCC immediately.
The issue is that the city of Busan and the local community have significant opposition to the shareholding of AIR BUSAN. Jin Air and Air Seoul are each 54.9% and 100% owned by their largest shareholders, Korean Air and Asiana Airlines, respectively. In contrast, as of the end of last year, Asiana Airlines, the largest shareholder of AIR BUSAN, held a 41.89% stake. The city of Busan and corporations based in Busan hold about 16% equity in AIR BUSAN. When AIR BUSAN was established in 2008, some Busan local companies participated in the funding, and in 2022, when its financial situation worsened due to COVID-19, the city of Busan invested 12.6 billion won in capital increase. Thus, AIR BUSAN has grown alongside the Busan community from its inception.
The Busan community believes that if AIR BUSAN is included in the integrated LCC, it will lose its regional hub carrier. They argue that a regional hub carrier is necessary for the growth of the Gadeokdo New Airport, which is set to open in 2029, and without AIR BUSAN, revitalizing the local economy will be impossible. Some civic groups in Busan are advocating for the separation and sale of AIR BUSAN or the establishment of an independent airline as alternatives.
The city of Busan is expected to propose a plan to attract the headquarters of the integrated Jin Air to the city. Busan Mayor Park Hyung-jun noted in a recent interview that, "After reviewing various options to retain the regional hub airline, it was concluded that attracting the headquarters of the integrated LCC (to Busan) is the most realistic alternative." Mayor Park stated that discussions with Korean Air had been completed and that he planned to consult with the final decision-maker soon; however, Korean Air has declined to comment on the ongoing negotiations.
In the aviation industry, considering management efficiency, attracting the headquarters of the integrated LCC to Busan and separating AIR BUSAN for sale are seen as difficult to implement. In November last year, the Ministry of Land, Infrastructure and Transport stated that the location of the integrated LCC headquarters should be determined at the discretion of the private corporations based on their management conditions. An industry insider explained, "Since AIR BUSAN operates lucrative routes from Busan and has been profitable since 2023, the likelihood that Korean Air will give it up is low."