Jeju Air to Take over Rival Despite Aviation Crisis

Jeju Air, Korea's No. 1 low-cost carrier, on Monday signed a deal to acquire fifth-ranked Eastar Jet at a bargain price amid the current crisis exacerbated by the coronavirus scare.

Jeju Air said in a public notice that it will acquire a 51.17-percent stake in Eastar Jet for W54.5 billion (US$1=W1,191).

The price tag has plummeted from W69.5 billion when the two carriers signed a memorandum of understanding last December.

"Both sides made concessions and adjusted the price in light of market conditions triggered by the coronavirus outbreak," Jeju Air said, and vowed to "maximize operational efficiency" by slashing overheads and optimizing routes.

The deal is the first merger in Korea's aviation industry. But industry watchers worry about the future of the new carrier since there are still too many players engaged in cut-throat competition.

The market seemed to have vast growth potential even until early last year, but since then conditions have gotten so bad that the six low-cost carriers in a joint statement last week begged for emergency funding from the government.