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By You Soo-sun
The government has rejected license applications by two small low-cost carriers, according to the Ministry of Land, Infrastructure and Transport, Friday.
The two carriers, Aero-K and Yangyang Flight, requested air operator's certificates (AOC) from the ministry on June 26 and June 29, respectively, seeking to become the next budget carriers in the country.
The ministry rejected their requests, however, citing concerns about their financial status and ability to ensure safety. The ministry also pointed to the saturation of the low-cost carrier market as reasons for denying their requests.
It came to the decision after consulting with related institutions and experts, and undergoing a committee review which examined if the two carriers satisfied the seven requirements needed to operate flights.
Under the current requirements, new carriers need to have at least 15 billion won ($13.9 million) in capital and be equipped with three aircraft. They must also be financially secure and be able ensure the safety and convenience of customers. Additionally, there must be no concerns about excessive competition among carriers.
Aero-K, which operates from Cheongju, North Chungcheong Province, has equipped itself with sufficient capital and aircraft. But the ministry rejected its application based on grounds that it may lead to further saturation in the routes it would operate on.
As for Yangyang Flight, it said there is insufficient demand at its operating airport in Yangyang county, Gangwon Province.
The committee also recommended the ministry to strengthen its requirements for granting low-budget carriers operation licenses, calling for an increase in the minimum capital requirement for new carriers to 30 billion won, from 15 billion won, and the minimum number of aircraft from three to five.
The ministry plans to revamp carriers' operation regulations and strengthen the carriers' operation requirement standards following these recommendations.
Currently, six domestic low-cost carriers operate flights. Air Seoul, owned by Asiana Airlines, was the latest to have obtained a license early last year.
