Jeju Airlines (also known as Jeju Air), South Korea’s largest budget carrier, is planning to acquire a 51% stake in its competitor, another South Korean low cost carrier Eastar Jet, signaling strains in the country’s already crowded budget carrier market
The purchase, currently valued at $59.5 million (69.5 billion won), is expected to be signed into a memorandum of understanding the following week and executed by the end of the year, Jeju Air revealed on December 18, 2019.
Eastar Jet, which began service in 2009, is the country’s fourth biggest budget airline. It operates a fleet of 23 aircraft, a mix of various Boeing 737 variants, including two 737 MAX 8s.
The airline has recently been struggling with financial problems, partially due to the Boeing 737 MAX grounding and a trade dispute between Japan and South Korea, which has resulted in travel demand to Japan falling. In September 2019, it turned to its cabin crew for help withstand passenger business downturn, asking flight attendants to take unpaid leaves of up to four weeks.
A late-comer to the low-cost business, South Korea now has six budget carriers operating both domestic and regional flights: Jeju Air, Eastar Jet, Jin Air, Air Busan, Air Seoul, and T’way Air. Three more budget carriers are expected to be launched in 2020.