The South Korean government is seeking to tighten entry requirement for budget airliners to ease the glut in the air travel market.
The Ministry of Land, Infrastructure and Transport said Monday it plans to submit revisions to the aviation law calling for strengthened requirements for new and existing low-cost carriers (LCCs).
Market barriers that had been lowered to ease entry would be heightened to ensure passenger safety amid heated competition. There are currently six budget carriers operating in Korea.
The minimum capital needed to file for an operation license would be raised to 30 billion won ($28.2 million) from the current 15 billion won. The required fleet size would also be upped from three planes to five.
The ministry said the more stringent requirements are to prevent fledgling LCCs from going under due to insufficient capital and to ensure qualified players enter the market. Industry experts say a budget carrier needs at least six to eight jets to start making a profit.
The ministry also intends to scrap a rule that allows carriers with a track record of 20,000 accident-free domestic flights to start international operations.
Existing carriers would be subject to stricter oversight. Under the current law, budget carriers with an impairment loss rate of over 50 percent for more than three years receive a ministerial order to improve their finances. This period could be shortened to two years. The revision also calls for revoking the LCC license if the impairment loss lasts for more than three years as well as shortening the cancellation period.
The legislation is expected to be confirmed in July after hearing and cabinet study.
By Moon Ji-woong and Kim Hyo-jin
[ⓒ Pulse by Maeil Business News Korea & mk.co.kr, All rights reserved]