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Spring and Eastar to study cooperation
July 19th 2019
Growing China-Korea market sees the two LCCs weigh cooperation from marketing to investment. Read More »
China’s Spring Airlines and Korea’s Eastar Jet are expected to soon announce a Memorandum of Understanding. Industry observers expect the two carriers to consider a range of possibilities from flight partnerships to investment. If equity transfer proceeds, it would most likely be Spring investing in Eastar.
Eastar is one of Korea’s LCCs unaffiliated with a parent airline. It has demonstrated interest in partnerships. It codeshares with fellow Korean LCC t’way on the Seoul-Taipei route. Due to bilateral constraints they each have less than a daily flight but combined can offer greater frequency. Eastar was the only non-HNA member of the U-Fly Alliance, which seems defunct and no longer has a working website.
Jeju Air also has shown collaborative interests, joining the Value Alliance and recently codesharing on Jetstar’s forthcoming Gold Coast-Seoul flights. But Eastar is much smaller than Jeju, although it plans to rapidly grow its fleet of 23 aircraft to 60 by 2025.
Spring Airlines has faced government constraints growing in Seoul. While Spring offers many flights to Jeju, it has only four weekly flights to Seoul. Spring has similar constraints in Tokyo and has better access to the rest of Japan.
Eastar Jet recently received approval for a Shanghai service and will fly Seoul-Shanghai by using the existing Shanghai slots it holds for Jeju-Shanghai flights. Korea and China recently expanded their air service agreement. On the Korean side, LCCs made significant gains.
Spring has long considered partnerships and codeshares, mostly for intercontinental airlines wanting domestic access beyond Shanghai. Spring’s IT has historically been a limiting factor. Spring’s own international pivot in recent years logically makes the airline consider foreign partnerships.
Spring is profitable and sits on a cash pile it cannot use to quickly grow its fleet since aircraft importation is highly regulated. State-owned Chinese airlines are warming up to more foreign airline investments, but their state ownership makes foreign investment a difficult and lengthy process.
