Loading

Northeast Asian LCC subsidiaries consider IPOs - but risk hurting parent group strategy

In Northeast Asia there are more low cost airlines that are subsidiaries of full service airlines than there are independent LCCs. Some of the LCC subsidiaries were born not out of necessity, but because LCC growth was regarded as inevitable and full service airlines wanted a head start. Many of the LCC subsidiaries today still have a hazy strategic vision and undefined relationship with their full service parent.

There needs to be greater airline group integration to respond to an acceleration of change in Asian aviation. There is global growth and particularly strong expansion in regional travel as incomes rise and visa restrictions fall. Pressure on long haul, once strongly profitable, requires that the entire full service operation be re-evaluated.

Group integration is risked by an LCC subsidiary having an IPO, which would distance the low cost and full service brands. LCC shareholders may find they are at the whim of the full service airline. These scenarios are different from the successful IPOs of the independent LCCs Jeju Air and Spring Airlines. Korean Air's Jin Air plans to list by the end of 2017.

This CAPA Premium Analysis article is 3,214 words.

To access CAPA Premium Analysis you need a CAPA Membership

Your window into the latest insights

CAPA employs an industry-leading Analyst team based in Europe, North America, Asia and Australia who offer unique perspectives and independent and accurate commentary of critical industry developments globally. CAPA Members rely on our Analysis to unlock valuable insights and actionable intelligence to keep ahead of the game.

Big picture strategic view

Our Analysts don’t just report the news - they take a big picture strategic view of aviation dynamics, issues and trends and analyse the implications of these developments for you.

Global intelligence

The CAPA Analyst team is based globally to ensure our CAPA Members have access to independent, unique perspectives covering an entire spectrum of daily, worldwide commercial aviation developments.

Customise your Alerts

CAPA Members can use CAPA Alerts to receive daily, weekly or monthly and customised updates on our Analysis.

I'm very impressed by the factual and detailed analysis CAPA is always doing.

- CEO, Airline Member
To learn more, contact us:
Phone: +61 2 9241 3200 | Email: membership@centreforaviation.com