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.
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