Singapore Air in talks with Jeju Air over stake
Singapore Airlines (SIA) is in talks to buy a stake in South Korea’s largest low-cost carrier Jeju Air.
April 1, 2015
Singapore Airlines (SIA) is in talks to buy a stake in South Korea’s largest low-cost carrier Jeju Air. The two said are in talks about a possible investment, but that nothing had been decided. Jeju aims to roughly triple sales to 1.5 trillion won (US$1.3 billion) by 2020, driven by demand from Northeast Asia, particularly China.
A deal with Jeju would fit SIA’s push to diversify away from its mainstay fullservice business and increase exposure to high growth regions, after two consecutive years of falling profits amid high oil prices and intense competition, particularly from the Middle Eastern carriers.
In recent years SIA has launched Singapore-based, long-haul, low-cost carrier Scoot, which then set up an affiliate in Thailand, as well as Vistara, an Indian full-service airline with conglomerate Tata Sons. SIA also increased its stake in Australian full-service carrier Virgin Australia Holdings and troubled short-haul lowcost carrier Tiger Airways, as it sought to steady its footing against intense competition in its own backyard. While Southeast Asia’s low cost carrier market is extremely competitive, industry analysts say the potential for low-cost carriers in Northeast Asia is huge, as full service carriers still dominate in China, Japan and South Korea.