Jeju Air-Eastar Jet deal would advance Korean LCC consolidation

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Jeju Air's proposed takeover of Eastar Jet is a significant development for South Korea's airline sector. The pair are each important players in a crowded South Korean low cost carrier field, and their combined footprint will change the competitive dynamics in some of the country's most important international and domestic markets.

It has been clear for some time that the South Korean LCC sector is ripe for consolidation; a Jeju-Eastar merger would be an important step in that direction.

There are currently at least six locally based LCCs in South Korea - Jin Air, Jeju Air, Eastar, T'Way, Air Busan, and Air Seoul. South Korean authorities have added new competitors to the mix by approving three more airlines - Fly Gangwon, which launched in Nov-2019, and Aero K and Air Premia, which are both due to begin flights this year.

More than 20 LCCs - including Korean and overseas-based carriers - competed in South Korea's international markets in 2019. CAPA and OAG data show that as of 13-Jan-20 LCCs account for 37.8% of South Korea's international seats and 50% of domestic seats.

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