Daemyung Sono Hospitality Group (Daemyung Sono), South Korea’s largest hotel and resort company, has recently expanded its presence in the aviation sector by consecutively acquiring shares in two low-cost carriers (LCCs), becoming the second-largest shareholder in both. After securing a significant stake in T’way Air in June, the company signed a contract on Oct. 15 to acquire half of the shares held by JC Partners in Air Premia for 47.1 billion won (approximately $34.02 million), positioning itself as one of the second-largest shareholders. Moreover, Daemyung Sono has secured a call option to purchase the remaining shares from JC Partners after June next year, potentially enabling it to become the sole second-largest shareholder of Air Premia.
Daemyung Sono has expressed ambitious plans, stating that it intends to not only enter the aviation industry but also to create synergies between its hotel and resort infrastructure and the aviation sector as part of a broader push toward becoming a global company. While the company has no immediate plans to take over the management rights, the industry closely monitors the situation, speculating on possible scenarios such as forming an integrated LCC in the future.
As the merger between Korean Air and Asiana Airlines—the two largest carriers in South Korea—becomes increasingly imminent, the country’s aviation industry is shifting towards a dual structure: “an integrated Korean Air versus LCCs.” Since Jeju Air’s entry into the market in 2005, South Korea’s LCC sector has faced criticism for oversaturation, with nine LCCs currently in operation following successive government approvals. South Korea now ties with the U.S. for the highest number of LCC operators globally, fueling speculation that significant market shifts are forthcoming.
Once the Korean Air-Asiana Airlines merger is completed, there are expectations for an “integrated LCC” combining the two airlines’ subsidiaries—Jin Air, Air Busan, and Air Seoul—while other LCCs work to develop counterstrategies. Some carriers are seeking differentiation by expanding long-haul routes to Europe and the Americas, while others are exploring mergers and acquisitions. In a statement made in July, Jeju Air’s CEO emphasized that private equity firms investing in low-cost carriers (LCCs) will eventually seek to exit, urging the company to remain vigilant for opportunities involving LCCs held by these firms. Meanwhile, Jeju Air recently withdrew its bid to acquire Eastar Jet.
However, LCCs continue to face challenges in profitability. Among Korea’s six listed airlines, Asiana, Jeju Air, and T’way Air reported losses in the second quarter of this year. Although this period is typically the off-season, intense competition among LCCs, particularly on short-haul routes, has put additional pressure on profitability.
According to Jung Yeon-seung, an analyst at NH Investment & Securities, despite a recovery in travel demand, the increased supply has driven fares down. Even during the upcoming peak season, fares are expected to remain lower than last year.
LCCs are aggressively expanding their route offerings beyond their traditional focus on Southeast Asia, China, and Japan to enhance consumer choice and profitability. Jeju Air recently became the first Korean LCC to operate flights to Batam, Indonesia. Air Busan launched services to Bali, a destination previously dominated by major carriers, while T’way Air introduced a new route to Frankfurt earlier this month.