Asiana Airlines Part 1: Air Seoul approval received. Asiana has a window to regain LCC initiative

Having ignored the LCC market in Seoul, Asiana Airlines finds itself in a position of duress, as it finally prepares to have a presence in the growing segment by launching a new LCC, Air Seoul. Asiana received approval for the airline on 28-Dec-2015, and it will launch in 2H2016. This is upwards of a year late, with the paperwork unofficially delayed due to Asiana's safety incidents during 2015.

Air Seoul is Asiana's second LCC after Air Busan. That LCC has achieved financial and strategic success, even if the LCC's mixed A320/737 family fleet is not a vote of confidence in LCC efficiency, but this is largely because other airlines until recently ignored Air Busan's namesake Busan market. Korean Air's dual brand strategy with Seoul-based LCC Jin Air may have room for growth, but they are far ahead of Asiana-Air Seoul.

Air Seoul will initially take over some of Asiana's secondary Japanese city routes, a segment where Asiana has struggled, and where there is limited LCC competition. Asiana will also look to deploy Air Seoul in some Southeast Asian markets. Air Seoul could become more an 'Asiana Lite' than a genuine LCC. This may deliver benefits, but will mean that Air Seoul falls short of its potential at a time when Asiana finds itself in strategic crisis.