Jeju Air has emerged as a potential buyer for Asiana Airlines’ cargo business, which Korean Air is seeking to sell. Jeju Air is the sole low-cost carrier (LCC) in the domestic market that owns a cargo fleet. Its performance has been on the rise in recent years supported by an increase in travel demand during the pandemic. The sale of the airline is currently gaining momentum, especially with the news that the European Union (EU) competition authority has conditionally approved the merger of Korean Air and Asiana Airlines.
According to the airline industry, Jeju Air is reportedly in talks to acquire Asiana’s cargo business. In particular, Jeju Air’s parent company, Aekyung Group, is said to be interested. However, Jeju Air said that it “cannot confirm” the acquisition.
Industry insiders cite “economies of scale” as a reason for Jeju Air’s interest in Asiana’s cargo business. Jeju Air has two Boeing B737 freighters that carry batteries, auto parts, and e-commerce shipments to and from China, Vietnam, and Japan.
Jeju Air generated $18 million (24.7 billion won) in revenue from its cargo business in the third quarter. However, the cargo business accounted for only 2 percent of its total revenue. As the effects of the pandemic are limited in the passenger airline market, it is necessary to diversify revenue such as cargo.
Asiana Airlines has a total of 11 cargo planes and recorded $ 849 million (1.129 trillion won) in international air cargo revenue in the third quarter of last year. It operates 21 routes to 25 cities in 12 countries, including the U.S., Germany, Austria, Belgium, Italy, and Russia. Having led the domestic air cargo industry for nearly 30 years since 1994, Jeju Air has a strong relationship with shippers.
“Jeju Air’s cargo routes are mostly in Asia, which limits its sales volume and profitability,” said an aviation industry insider. “If Jeju Air acquires Asiana Airlines’ cargo business, it could quickly become the country’s second-largest air cargo company.”
