Air Seoul SWOT: growth opportunities, a need to lower costs and secure funding
Air Seoul has surpassed one year in operation from its Jul-2016 launch, and now operates four aircraft. As expected, first year losses are high, with 9M2017 losses of USD20 million for a -30% margin. Yet by the standards of start-ups, this may be in line with expectations – and certainly could have been worse.
Air Seoul is wholly owned by Asiana – a relationship that delivers mixed outcomes. Asiana is able to hand traffic rights and slots to Air Seoul, but these may not always be the best markets for Air Seoul, or markets worthwhile for the Asiana group to maintain a presence in. These markets could be a distraction from bigger, more core, LCC opportunities.
Seizing all opportunity portfolios is challenging, given Asiana’s financial difficulties limiting capital for Air Seoul’s expansion, even if the airline becomes profitable in 2018, as Asiana forecasts. Air Seoul received the CAPA Asia-Pacific LCC Start-Up of the Year Award.
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