South Korea’s Ministry of Land Infrastructure and Transport (MOLIT) announced a decision to tighten the conditions for opening of a new Low Cost Carrier (LCC). Now, the required initial capital has to be of $28 million (double the previously required sum) and the starting fleet of at least five planes (three more than before). However, the current criteria that a company is eligible for international flights only after 20.000 domestic flights without accident will be abolished.

Aero K and FlyYangYang saw their business licenses rejected in December 2017, because of concerns from the MOLIT about their financial strength. The two companies already announced that they would abide by the new legislation.

As for active airlines, the government can now revoke a business license if an airline sees more than 50% of its capital impaired for two years. The previous delay was three years.

A review of the current South Korean market will determine in the months to come a new distribution of traffic rights, which will favor companies that are reliable and show corporate social responsibility, according to the ministry.

With six domestic low-cost carriers operating in South Korea, the land ministry considers the market to be saturated. That concern is also shared by the already active airlines that saw the rejection of Aero K and FlyYangYang as a sensible measure. The objective of that new legislation is to bring stability to the market and also establish a fair competition between the airlines. It should come into effect in July 2018.