12/02/12, 11:38:40 EST

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Korean Air budget airline has 2008 start

businessweek.com

Korean Air Lines Co. said Monday that its new low-cost airline was set to begin operations next May with routes to regional destinations including China and Malaysia.

Korean Air said in a press release that its board on Friday approved plans to invest 20 billion won ($21.5 million) to set up a separate corporate body for the carrier, tentatively called Air Korea, by the end of December.

Air Korea plans to obtain three Airbus A300s and two Boeing 737s for its fleet, Korean Air said.

The new airline will begin taking advantage of open skies agreements with routes to Shandong and Hanna provinces in China, destinations in Japan excluding Tokyo, Thailand and Malaysia, Korean Air said.

Korean Air, South Korea's largest airline, said Air Korea "gradually plans to add other short- or mid-distance destinations."

Maintenance and operation training were to be handled by Korean Air, it said.

"This outsourcing will ensure the operational safety of Air Korea, which has been indicated as a problem in some other low cost airlines," Korean Air said, without elaborating.

Korean Air said in June that it planned to launch a budget carrier within three years.

In Monday's statement, Korean Air said that Air Korea's launch was meant to "proactively face the developing trends in the Asian airline industry."

A host of airlines have emerged in Asia in recent years providing low cost fares, often to resort destinations, though a series of crashes, including one in Thailand in September, have raised safety concerns.

 Printable Version  | published Nov 26, 2007