LCCs in Korea: tighter entry rules for startups

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Korea is home to six LCCs, the most recent of which launched in 2016 and then 2010. The prevailing assumption was that the market would consolidate, but new players have made known their wish to launch.

Unlike in other Asian markets, all flying or proposed LCCs are wholly Korean brands. The former Tiger group was unsuccessful in launching a Korean unit, and the AirAsia Group was told that an application would be rejected. This policy is unlikely to change.

What is different from the policy revisions is Korea's apparent attempt to weed out some of the smaller LCCs that have less in financial resources. Korea will also exercise greater control over airline finances and exclude airlines from slot allocation, which should make the process fairer.

Korea does face medium term market saturation, but the start-up process has been coloured by a degree of protectionism. With a final framework for start-ups, Korea appears set for new market entrants.

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