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Asiana launching premium economy and Air Seoul to mend bottom line

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January 8th 2016

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Asiana Airlines’ budget airline-in-the-making, Air Seoul, has secured its business licence from the South Korean Ministry of Land, Infrastructure and Transport (MLIT) and is now awaiting allocation of an air operator’s certificate (AOC) in time for its planned June launch. Read More » The LCC is understood to be planning to take over 11 Asiana routes to provincial Japan and some loss-making overnight routes to Southeast Asia.  

In the 2015 third quarter, Asiana posted 1.45 trillion won ($1.2 billion) in sales, an 8.2% decline from a year earlier. Its operating profit fell 37%, to 48.4 billion won ($40.3 million).  In December, to stem the profit fall-off, Korea’s second largest carrier said it would stop flying to Vladivostok from February and to Yangon and Bali in March.

The carrier’s restructuring has met with unionized opposition after it internally announced it would rely more on outsourcing and reduce overall staff numbers. It has announced a system for flexible leave of absence and retirement and has reportedly cut executive salaries and perks, such as car use.

Meanwhile, the Kumho Group carrier will launch a premium economy cabin in its 30-on-order A350s from 2017-2022. Asiana has come under pressure from ever-intensifying LCC competition in its home markets. The restructuring measures and the launch of Air Seoul is aimed at a profit-loss improvement of 160 billion won ($13.6 million) a year. “Asiana will continue to grow by recovering its competitiveness and improving its structure," Asiana CEO, Kim Soo-cheon, has said. "We will normalize and complete our management reform in two years."

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