Daemyung Sono Plans to Secure Management Rights of Air Premia
Big Three System Expected Amid 'Integrated LCC' Wave
Daemyung Sono Group's declaration of management participation in T'way Air is expected to shake up the low-cost carrier (LCC) market. In addition to T'way Air, Daemyung Sono also holds shares in Air Premia. With the merger of Korean Air and Asiana Airlines leading to the full-scale launch of the 'integrated LCC' including LCC subsidiaries Jin Air and Air Busan, there is speculation that Daemyung Sono may merge T'way Air and Air Premia.
According to the aviation industry on the 20th, Daemyung Sono, which is known to have gained an advantage in negotiations for the sale of T'way Air shares, is also set to secure management rights of another LCC, Air Premia. If Daemyung Sono exercises its call option in June, it will become the second-largest shareholder with a 22% stake in Air Premia, and is reportedly considering merging the two LCCs.
Daemyung Sono's management participation draws attention because the LCCs in which it holds shares all have strengths in long-haul routes. This differs from other LCCs that typically specialize in short- and medium-haul routes. T'way Air operates European routes, while Air Premia flies to the United States. The company believes this could fill the gap left by Asiana Airlines.
If Daemyung Sono pushes for the integration of long-haul LCCs, the domestic LCC market is expected to change significantly. Based on last year's market share, Jin Air leads with 41% by combining Air Busan and Air Seoul, while T'way Air and Air Premia follow closely with 22%, just behind Jeju Air's 26%. In terms of aircraft, T'way Air and Air Premia have 44 planes, surpassing Jeju Air's 41.
For this reason, some speculate that Jeju Air may attempt to acquire shares in Eastar Jet to maintain its market dominance. This was attempted once in 2019 but was canceled due to the impact of COVID-19 and other factors. Eastar Jet is wholly owned by the private equity fund VIG Partners, making it likely to be put up for sale.
A Sono International official said, "Although AP Holdings, the largest shareholder of Air Premia, is taking a tough stance on retaining management rights, Chairman Seo Jun-hyuk of Daemyung Sono is also very determined," adding, "For now, we are focusing on successfully concluding the T'way Air deal."
Once the acquisition of T'way Air shares is successfully completed, Daemyung Sono plans to hire and deploy aviation industry professionals and focus on strengthening safety. Furthermore, it aims to create synergy by combining the aviation and hospitality industries. Sono International owns 18 hotels and resorts domestically with about 11,000 rooms and has also expanded overseas. The company plans to reveal detailed blueprints after the shareholding arrangements are finalized.
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