Korean Air has been accused by Air Busan, the LCC affiliate of Asiana Airlines, of “stealing” pilots from Air Busan and other LCCs in South Korea by luring them with large paychecks and generous benefits (Korea Times, 05-Apr-2011). Air Busan has claimed that Korean Air has been intentionally targetting its well-trained pilots, claiming this constitutes an act of unfair trade by using a dominant market position. “Korean Air operates a training centre, producing a substantial number of pilots. However, it is still engaged in the dubious practice of stealing flight operators from low-cost carriers. This is tantamount to an act of violating fair trade rules,” an Air Busan spokeswoman said. Korean Air has responded by saying there is nothing wrong with its recruitment practices, insisting it has not targetted experienced pilots of any particular airline. “It is totally up to pilots themselves whether to change workplace or not. It will be discriminatory if we tell pilots from budget carriers not to apply for our positions,” a Korean Air spokesman said. Korean Air recently hired four former Air Busan pilots.
Korean Air accused of 'unfairly recruiting' pilots from Air Busan
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Yet even before, Korean Air's debt neared 1,000% and available cash covers only a month of revenues. The market does not have confidence in Korean Air's attempt to fix its liquidity position, and the Cho family that established, and still manages, Korean Air faces sticky scandals. As Korea is in political and business upheaval, chaebol conglomerates are no longer sacred.
Delta Air Lines to the rescue? With strategy and financials battered, Korean Air views Delta's long sought partnership more favourably than it did a few years ago when Korean Air was on a high and seemingly did not need its pushy SkyTeam cousin. Delta may be offering to inject equity into Korean Air, and perhaps will not partner without equity involved.
Korean LCCs: fleet surpasses 100 aircraft but market faces growth constraints; China the latest
Korea's LCC sector ended 2016 with 103 aircraft – the first time the collective fleet had crossed the 100 mark for what, until recently, was Northeast Asia's most dynamic market. Korea has six LCCs, with Jeju Air regaining a strong lead as the largest LCC. Half of Korea's LCC fleet has been added in the last three years. It is Northeast Asia's largest LCC market after China and, surprisingly, well ahead of Japan.
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And it is unclear how much further Korea's LCCs can grow in the short term. They have mostly flown domestically, and slots are now constrained. International opportunities are also challenging, and further complicated by the Jan-2017 decision of China to reject charter applications during the popular – and very profitable – Chinese New Year. Korea's LCCs needed liberalisation, not antagonism.