Saturday, April 15, 2017

Korea’s Hanwha to invest $14.12mn in a new regional budget carrier

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.

According 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 Korea.

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 Seoul.

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.

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.

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