The South Korean low-cost carrier, Air Premia, has obtained approval from the government amidst the extended Covid-19 pandemic. The transport ministry announced the news on Friday, 16th July 2021.
The ministry has issued an Air Operator Certificate(AOC) to the airlines to use their aircraft for commercial purposes. Now all that is left for the Air Premia is to report its routes to the aviation authority before they commence their first flight services.
South Korea’s first hybrid carrier that emphasizes both budget and premium services will take on both medium and long-haul international routes after its launch.
Air Premia 787-9 HL8387 test flight at KPAE today.— Jennifer Schuld (@JenSchuld) March 20, 2021
The “buzzing” noise you hear is from the RAT (Ram Air Turbine), deployed as part of flight testing. pic.twitter.com/fEYtb4giUH
Funds Amid AOC Delays
Despite being delayed from starting to service, the funds for this potential airline haven’t stopped flowing in.
Air Premia closed its series A financing round with KRW 25 billion in September 2018. It also secured KWR 10.5 billion from the anchor investors in July 2018.
Air Premia 787-9 HL8387 C1 flight at KPAE today. pic.twitter.com/7SBbNAeUrr— Jennifer Schuld (@JenSchuld) March 25, 2021
After that, it received KRW 165 billion investment for its Series B Round in January 2019. The investors of the airlines haven’t been disclosed yet; however, in November 2018, Air Premia listed potential private equities investors who had interests in its project like IMM Investment, JKL Partners, SkyLake Investment, Dasishin Private Equity, and Mirae Asset Venture Investment.
Further, recently in 2021, the airlines secured a hefty amount of funds from Korchina Logistics, a global freight forwarding & logistic service provider, and private equity fund JC & Partners; the duo partnership bought a 68.9% stake from the airlines and pledged to inject KRW 65 billion($52.5 million) into it.
The airline’s innovative approach and its full potential to grow were considered the significant factor that attracted numerous investors to its aid.
New Korean Airline- Air Premia
The Korean Airlines company was founded by the former President of the JEJU Air, Kim Jong Chul, on 17th July 2017. Collecting the KRW 165 billion, the airlines decided to start its service with the Boeing 787-9 Dreamliner. The airlines developed business models to prioritize the untapped market sets it apart from its competitors. With its business model, the Air Premia hardly generates direct competition, its strategy to select the medium and long-haul destination hasn’t been reached out by its competitors, even if they have similar destinations, the supply of its competitors in those regions are pretty insufficient considering the growth of the market.
The unique business model of Air Premia providing a hybrid, customer-focused service to its passengers providing spacious legroom, free snacks, and amazing in-flight entertainment option at a budget cost, has made the airline’s launching service one of the most prominent in the Korean aviation industry. Following the LCC operation model in a single-aisle and seat configuration will offer a point-to-point routes system but in low-density east configuration and premium service to attract more passengers for the airlines. The passengers of the Premium Economy class will be accommodated in 42″ inch seats, including the business-class-level services like check-ins priority, boarding, and baggage handlings. On the other hand, the economy seat pitch will be 35″, the widest economy seat in the class. On the expense aspects, Air Premia is set to charge 80%-90% of the Full-Service-Carriers for its economy class and 140% of the FSC’s economy class for its premium economy class.
South Korea currently has two full-service carriers, Korean Air Line Co. and Asiana Airlines Inc., including 10 of its low-cost carriers, Air Incheon Co., Jeju Air, Jin Air, Air Busan Co., Air Seoul Inc., Eastar Jet, T’way, Fly Gangwon, Air Premia, and Air Busan Co. Air Incheon is more of a cargo-focused carrier in the LCC section, and the nine other carriers in the LCC segment are passengers carriers.
Starting With Boeing
Air Premia had just delivered its first aircraft, a Boeing 787-9, in April 2021. The Boeing aircraft is the first of the three B787-9 variants of the ordered three that the airlines will take on a dry-lease from Air Lease Corporation. The airlines had originally planned to receive its first B787-9 in a long-term lease back in mid-2020; however, the Covid-19 pandemic pushed the delivery date pretty far, which even threatened its business license as it was due to expire on 5th March 2021. Taking the current pandemic situation, the Korean authorities extended the validity time period to the airlines for completing its license gauntlet and service launch.
The other two B787-9 aircraft that are yet to reach Air Premia are currently stored at Victoriaville and Charleston, South Carolina, and will be delivered to the airlines by the end of 2021.