Asiana Airlines is facing difficulties in establishing a second low-cost airline, largely due to oppositions from the shareholders of Air Busan. The air carrier has pushed forward with a plan to create a new budget carrier based in Incheon International Airport away from Gimhae Airport, the home of Air Busan.

 

According to airline industry sources on July 29, Asiana Airlines has not been able to narrow the difference in opinions with the major shareholders of its Busan-based low-cost carrier. The airliner was founded in 2008 by Asiana Airlines with a 46-percent stake while the Busan Metropolitan City Government putting up a 5-percent stake and the remaining 49-percent stake chipped in by Busan-based businesses such as Seun Steel, Dongil Holdings, Nexen Tire, and Busan Bank.

 

After Asiana announced its intentions to establish a second low-cost airline early this year, Air Busan shareholders showed negative responses, saying, "The flight routes of a new airline may overlap with those of Air Busan. In addition, the support Air Busan gets from Asiana, the largest shareholder, may be diminished." A Kumho Asiana Group official said in June, "We will make an offer that Air Busan shareholders are willing to take so that they can participate as the new low-cost airline's shareholders."

 

Since then, the two parties have not been able to reach an agreement in investment shares. Asiana offered to the Air Busan shareholders that it would be better to set the initial capital at 15 billion won, with the stake of the current Air Busan shareholders as low as possible because losses for an extended period of time would be inevitable. To this, Air Busan shareholders countered, "Just as in the case of Air Busan, let Asiana take a 46-percent stake and the other firms assume the remaining 54-percent stake."

 

An official with the Busan Chamber of Commerce that speaks for the interest of the Air Busan shareholders said, "Instead of establishing an independent budget carrier, it would be better to create a subsidiary under Air Busan. That way, the problems of overlapping flight routes and profit sharing could be addressed."