South Korea’s conglomerate Hanwha Group will make capital investment in a regional domestic low-cost carrier (LLC), a move that would further crowd the heavily competitive budget carrier market.
to aviation industry sources on Wednesday, the group’s defense and
aircraft engine parts unit Hanwha Techwin Co. and brokerage unit Hanwha
Investment & Securities Co. will invest 16 billion won ($14.12
million) in fledgling KAIR Airlines based in Cheongju in central South
Hanjin Group, which controls the country’s flag carrier
Korean Air, runs low-cost carrier Jin Air Co. and Kumho Asiana Group,
parent of Asiana Airlines, operates budget carriers Air Busan and Air
Hanwha said it sees enormous growth potential in the
domestic LCC market, but added that capital investment does not suggest
it was directly entering the market. The commercial air service can
bring create synergy effect with its affiliates such as Hanwha Techwin,
which produces aviation engines and parts including Geared Turbo Fan
(GTF) and Leading Edge Aviation Propulsion (LEAP).
Aviation engines account for 40 percent of Hanwha Techwin’s total sales. It aims to provide parts for carriers for KAIR.
which is yet to receive a license from the government, plans to run
short-distance flights in the Asian region from Cheongju. In March, the
new airline ordered eight Airbus A320ceos, an unusually costly and
aggressive move for a new carrier.