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Singapore Airlines' Interest in Jeju Air (제주 항공)

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  • Singapore Airlines' Interest in Jeju Air (제주 항공)

    While I kind of expected Singapore Airlines to make its moves in the North-East Asia aviation sphere, the choice of airline here is quite surprising...

    http://www.channelnewsasia.com/news/....html?cid=FBSG

    While a Korean carrier is natural given that the highly restrictive Korea-Singapore ASA limits Singaporean carriers from further increasing frequency and even capacity (amended not too long ago to include A350s and B787s on routes between the two countries), wouldn't full-service carrier Asiana Airlines be a better fit for Singapore Airlines?

    Am not sure how this dynamic would impact the SQ-OZ relationship, given that OZ and Air Busan both compete against Jeju Air on domestic Korea and short-haul international flights out of ICN.

    But then again, we could see where the huge B738 order for MI could also end up at. Probably with Jeju Air? I doubt MI would need that many B738s and Jeju Air could take some from the order book, seeing as they want to own their planes and not pay long-term leases on them.

  • #2
    Perhaps we see that will become something like Tigerair Korea or Scoot Korea in the making?

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    • #3
      Originally posted by Metropolitan Airlines View Post
      Perhaps we see that will become something like Tigerair Korea or Scoot Korea in the making?
      A JejuScoot would be interesting. Perhaps a backdoor / LCC option to the USA?

      Comment


      • #4
        Centre For Aviation (CAPA) has a solid analysis of the geo-political and economic considerations surrounding this impending deal.

        http://centreforaviation.com/analysi...eju-air-214468

        It's quite telling, really... The fact that Korea is one of Changi Airport's largest inbound/outbound markets with 56 weekly flights — all just to one location in Korea — to Seoul (Incheon), speaks volume about the potential in the market.

        I was quite surprised with the choice of Jeju Air. Not too long ago, in the Korean business sphere here, there was talk about the Shinsegae Group's attempt to buy Kumho Industrial — which owns a 30.08% chunk of Asiana Airlines. With the huge, complex network of cross-shareholding in Korean conglomerates, this was a supposedly a major power shift in the Korean corporate world. I felt the SIA Group could have gone in at this point with the Shinsegae Group to acquire Kumho Industrial shares and gain a portion of Korea's no. 2 carrier. An equity holding in Asiana Airlines would have probably given the SIA Group a more synergistic partnership for focusing on the Americas.

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        • #5
          Unfortunately - No deal

          Singapore Air seeks Northeast Asia deals after collapsed Jeju talks -sources

          Aug 17 Singapore Airlines Ltd (SIA) is continuing to search for growth through partnerships and investment in Northeast Asia, two people close to the company told Reuters, days after tie-up talks collapsed with South Korea budget carrier Jeju Air.

          The airline, which tried to buy into China Eastern Airlines Corp Ltd in 2008, is particularly looking for a way to access China's vast domestic flights market, the people said.

          SIA has put money into markets such as India and Australia to boost income as growth in passenger numbers languishes far below the global rate, partly due to Gulf carriers offering an increasing number of indirect flights at lower prices.

          Its latest deal floundered on Thursday, with SIA saying it could not reach agreement with Jeju in what would have been its first investment in the region. It may now turn its attention to Chinese targets after Delta Air Lines Inc bought 3.55 percent of China Eastern in July, analysts said.

          "Not getting Jeju Air is disappointing but, while South Korea and the Northeast Asian low-cost market have potential, the bigger problem is China," said one of the people, who were not authorised to speak with media and so declined to be identified.

          "SIA needs a Chinese partner who can give them access to the domestic market, and feed traffic onto the SIA network. They don't even have domestic codeshare partnerships."

          The airline told Reuters it was open to strategic investment but declined to elaborate on any potential targets or deals.

          EXPANSION

          Chief Executive Goh Choon Phong, in office since January 2011, has so far sought growth by investing in Virgin Australia Holdings Ltd and Indian start-up Vistara, launching long-haul budget airline Scoot, and becoming majority owner of short-haul carrier Tiger Airways Holdings Ltd.

          But SIA passenger numbers have fallen 2 percent from 2007 while global traffic has risen 4.8 percent each year in the interim, showed International Air Transport Association data.

          "Competitors have upped their game and have successfully encroached into SIA's markets," Maybank Kim Eng analysts said in a recent report. "Furthermore, the emergence of low cost carriers such as AirAsia Bhd, (Cebu Air Inc subsidiary) Cebu Pacific and Lion Air has permanently changed the dynamics of the industry."

          CHINA CODESHARE

          The airline is already in China, flying to 11 destinations with subsidiary SilkAir. Codesharing with a local carrier would allow the pair to sell tickets for indirect flights to the partner's destinations, while deeper cooperation including investment could allow them to coordinate flight times.

          Neither arrangement is common in China.

          "SIA and SilkAir can fly directly to several points in China, but they can't cover every city," said Singapore-based analyst Brendan Sobie at aviation consultancy CAPA. "The Chinese domestic market is a big gap in SIA's network."

          Analysts point to China Air Ltd as a fitting partner for SIA as both are members of the Star Alliance group of airlines which cooperate with processes such as check-in, frequent-flyer programmes, and facilities like business lounges.

          The airline has an extensive domestic network out of both Beijing and Shanghai. But it is almost 20 percent owned by SIA's Hong Kong rival Cathay Pacific Airways Ltd which could block any overtures, analysts said. (Reporting by Siva Govindasamy; Editing by Christopher Cushing)

          Source: http://in.reuters.com/article/2015/0...10P2L420150817
          The solution to get into the Northeast Asian and Chinese market is simple - acquire Hong Kong Airlines from HNA group and make it a subsidiary. Cancel Fortune Wings Club and replaced by KrisFlyer. I am sure if this happens, Cathay Pacific will immediately lose a whole lot of customers.

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          • #6
            Originally posted by Metropolitan Airlines View Post
            Unfortunately - No deal



            The solution to get into the Northeast Asian and Chinese market is simple - acquire Hong Kong Airlines from HNA group and make it a subsidiary. Cancel Fortune Wings Club and replaced by KrisFlyer. I am sure if this happens, Cathay Pacific will immediately lose a whole lot of customers.
            Time for Singapore Airlines to start talks with the Kumho Asiana Group. That group has a liquidity crisis and the Singapore Airlines Group has a war-chest of cash...

            I don't think the HNA Group would be willing to lose effective control of Hong Kong Airlines / HK Express. And even if that is to be the case, you can safely bet that Cathay Pacific would throw a huge fit.

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