Asiana Airlines CEO embarks on restructuring programme: "We’re in a desperate situation"

Asiana Airlines is embarking on Northeast Asia's largest airline restructuring programme since the 2009 bankruptcy of Japan Airlines. Asiana will need to prove that it is not too little, too late. It has failed to seize growth opportunities and is a distant second place competitor to Korean Air. This is unlike two of its peer Northeast Asian markets: previously second place All Nippon Airways has surpassed JAL, while in Taiwan EVA Air rivals or exceeds flag carrier China Airlines in certain segments. "We're in a desperate situation where an intensive overhaul is necessary not as a temporary prescription but for our survival," Asiana Airlines CEO Kim Soo-cheon said.

Asiana attributes its situation to growing LCC competition, but this is only part of the problem. Asiana has been too dependent on full service regional traffic. It neglected the Seoul LCC market and is less than half the size of Korean Air's long haul operation. Its regional schedule is weaker than that of its competitors, its corporate culture too rigid, and Korea's regulator has shown concern with Asiana's recent safety incidents. Asiana's new Seoul-based LCC Air Seoul, which appears to have a limited remit, and the suspension of two regional flights hardly amount to an "intensive overhaul", let alone to measures that will result in Asiana realising its potential as a stronger challenger in Korea and Asia. There is much opportunity. Failing to grasp it risks Asiana being entrenched as a lower tier player.