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ABN-2012-05 - A321 INCDT
ABN-Route Map - 2015-01.jpg
Formed in 2007 and started operations in 2008. Subsidiary of Asiana Airlines (AAR). Low cost carrier, domestic, regional, & international, scheduled & charter, passenger & cargo, jet airplane services.
6F 853-1 Beomcheon Dong
Busanjin-Gu Busan 607-806, South Korea
THE REPUBLIC OF KOREA (TAEHAN MIN-GUK) WAS ESTABLISHED IN 1948, IT COVERS AN AREA OF 99,016 SQ KM, ITS POPULATION IS 46 MILLION, ITS CAPITAL IS SEOUL, AND ITS OFFICIAL LANGUAGE IS KOREAN.
February 2008: Asiana Airlines (AAR) invested KRW23 billion/$24.3 million in start-up Busan International Air (later to become Air Busan (ABN)) and become the managing shareholder of the new carrier with a 46% stake, it announced. Now capitalized to the tune of KRW50 billion, (ABN) will "focus on offering customers low fares, but with the quality service and safety assurance, that is synonymous with Asiana Airlines (AAR)," the latter said. An Asiana (AAR) "taskforce" will begin working on launching service.
April 2008: Asiana Airlines (AAR) has bought into planned new airline Air Busan (ABN), in another sign that South Korea may emerge as a major market for low cost carrier (LCC) operations. Asiana (AAR) paid 23 billion won/$24 million for a 46% stake. (ABN) is one of several new carriers planned in South Korea. Korean Air (KAL) plans to establish late this year Jin Air (JIN) as a new low cost carrier (LCC) subsidiary, while Singapore-based Tiger Airways (TGR) plans to launch next year, an associate airline in South Korea in partnership with the Incheon government.
November 2008: Air Busan (ABN), which is jointly owned by Asiana Airlines (AAR), the Metropolitan Government of Busan, and the Busan Chamber of Commerce and Industry, commenced commercial operations on November 3rd with an inaugural service from Gimhae International Airport in Busan to Gimpo Airport, West of Seoul.
(ABN) plans to offer 19 daily services on the Gimhae - Gimpo route, which it will operate under a code share arrangement with (AAR). (ABN) also plans to commence Busan - Jeju services on December 1st, 2008, again under a code share with (AAR).
(ABN) commenced operations with a fleet of two 737-58Es, ex-Asiana (AAR) acquired in August 2008. (ABN) will add a third 737-500, prior to the commencement of Busan - Jeju services. In 2009, (ABN) plans to take delivery of two 737-48Es, in April 2009 and June 2009, prior to the commencement of international services in second half of 2009 (to China and Japan), after it fulfils the necessary operational requirements under South Korean regulations.
(ABN) CEO, Kim Soo-cheon, stated (ABN) is seeking to become a regional carrier that is distinct from other Low Cost Carriers (LCC)s that have entered the South Korean market in recent years. While ticket prices would be -10 to -15% lower than Asiana (AAR) and Korean Air (KAL), (ABN) plans to offer a higher quality of services than rival (LCC)s, with such a strategy possible "because of the close cooperation between (ABN) and (AAR) that will provide trained personnel and safety guidelines".
September 2009: Increases domestic market share to 25%.
July 2010: Air Busan (ABN) is a low cost carrier (LCC) operating domestic services from Gimhae International airport (PUS) under a code share agreement with parent company, Asiana Airlines (AAR), which transferred all services linking South Kimpo with Busan and Busan with Jeju to Air Busan (ABN). (ABN) plans to introduce international services when eligible in 2011.
Parent organization/shareholders: City of Busan, & Asiana Airlines (AAR) (46%).
(IATA) Code: BX - 982. (ICAO) Code: ABL (Callsign - AIR BUSAN).
Main base: Busan Gimhae International airport.
Domestic destinations: Jeju 20 times a day; Hourly shuttle service to Seoul (Kimpo) (30 times/day.
International service: Plans for starting March 2011 to Fukuoka, and Osaka, Japan.
January 2011: (AWAS) (AWW) delivered one A321-231 (1970, HL8213) to Asiana Airlines (AAR) for sublease to its subsidiary Air Busan (ABN), which will operate the airplane from Busan to Taipei, Hong Kong, Osaka, and Cebu.
March 2012: Air Busan (ABN), the Asiana (AAR) subsidiary, launched daily flights connecting its Busan (PUS) base with Qingdao airport (TAO) in the eastern Chinese province of Shandong. (ABN) uses its 737-400s on the 785-kilometer route, which was launched on 19 March. Korean Air (KAL) is the only direct competitor on the route, providing six weekly frequencies.
May 2012: INCDT: - - SEE ATTACHED - - "ABN-2012-05 - A321 INCDT."
July 2012: Air Busan (ABN) expanded its network to China on 19 July when the Busan (PUS) based subsidiary of Star Alliance (SAL)’s South Korean member, Asiana (AAR) launched twice-weekly services to Macau (MFM). The flights, which are operated with 162-seat 737-400s, complement (ABN)’s thrice-weekly flights to nearby Hong Kong.
November 2013: Air Busan (ABN), the regional subsidiary of Asiana Airlines (AAR), increased its international offering on November 6th with the launch of services from Busan (PUS) in South Korea to Siem Reap (REP), making the popular South-Eastern Asian tourist resort its first destination in Cambodia. Four weekly flights are offered on the 3,500 km route and operated using 195-seat A321s. Korean Air (KAL) provides competition in the market from Busan to Siem Reap, which it serves with matching frequencies.
December 2013: Air Busan (ABN), an airline in which Asiana Airlines (AAR) owns a major share, has added Kaohsiung (KHH) in Taiwan to its route network from Busan (PUS) in South Korea. The four times weekly service began on December 11th and will be operated by (ABN)’s A321s. No other carrier serves this 1,640 km route. (ABN) now operates to 11 international destinations from Busan, including twice-daily flights to Fukuoka and Osaka Kansai. (ABN) operates a mixed fleet of 10 737s and A320-series airplanes, and recently celebrated its fifth anniversary.
June 2014: Air Busan (ABN) is planning to launch an initial public offering (IPO) in March 2015 to fund more growth. The Asiana Airlines (AAR) low cost carrier (LCC) subsidiary is partly owned by the Busan Metropolitan City. Founded in 2008, it is one of the more successful carriers in Korea, with a 2013 operating profit of +KRW278 billion/+$5 million.
The talk of an (IPO) comes on the back of several years of consistent growth (it carried three million passengers in its first two years of operation) aided by a new protectionist approach from Korean aviation authorities.
In May, the Korean Ministry of Land, Infrastructure & Transport (MLIT) blocked an AirAsia (ASW) application for an operating license, because it was not based in the country. It cited rules mandating local Korean airlines or investors cannot set up joint ventures (JV)s with foreign-based (LCC) operators, effectively shutting the door on locally based foreign competition.
Air Busan (ABN), Korea’s second biggest (LCC) after Jeju Air (JJA), operates 11 airplanes, that include a mix of Airbus A320s and Boeing 737s on Korean domestic routes to Jeju and Gimpo. However, it is increasing service on regional international routes. It currently serves China, Japan, Taiwan, Cambodia, and the Philippines.
(LCC)s now account for nearly 40% of domestic air traffic in Korea due to increasing budget tourism. (ABN) plans to expand routes to Malaysia, Australia and possibly Turkey to avoid a saturated local market. “We have yet to decide on the timing, method and underwriter [for the (IPO)],” Air Busan Executive Director, Choi Pan-ho said, adding the (IPO) is subject to approval from authorities and shareholders.
Korean domestic low-cost carriers (LCC)s are looking to expand their long-haul operations in coming months. In response to increasing tourism figures and a relatively crowded local market, carriers such as Jin Air (JIN), Asiana Airlines (AAR) subsidiary, Air Busan (ABN) and Jeju Air (JJA) are all said to be eyeing the possibility of expanding into long-haul routes.
According to figures from the Ministry of Land, Infrastructure & Transport (MLIT), (LCC)s now account for nearly 40% of total domestic air traffic in Korea. This points to a significant slowdown in potential expansion from original rates of some 10% a year, when (LCC)s first launched in Korea.
Jin Air (JIN) (CEO), Ma Won confirmed (JIN) is planning to expand flights “beyond its current boundary of Phuket” in Thailand, and will look to other long-haul destinations including Hawaii, Australia, and possibly Europe. “The only way to achieve a breakthrough in growth is to offer long range flights that go beyond Phuket,” he said.
Air Busan (ABN) is already extending its reach with a deal offered through AirAsia (ASW), with flights from Kuala Lumpur to Jeju, using Air Busan (ABN) for the final Busan - Jeju leg.
Reports also indicate Jin Air (JIN) wants to add Airbus A330s or Boeing 777s to its fleet, to serve new long-haul destinations. Air Busan (ABN) is also investigating flying deeper into Asia, to Australia and possibly Turkey, where its links with Turkish Airlines (THY) via the Star (SAL) Alliance network would be an advantage.
July 2014: A321-231 (1734, HL7713), ex-(D-AVXD), AerCap (DEA) leased.
December 2014: A320-232 (2840, HL7745), ex-(F-WWIE), Hong Kong Aircraft Corporation leased.
January 2015: South Korean low-cost carriers (LCCs) are ramping up international services to Guam, with two airlines launching routes from the southern city of Busan.
Jeju Air (JJA) introduced Busan - Guam flights January 8, while rival Air Busan (ABN) has asked the USA Department of Transportation for permission to operate the same route from June 30. The pair will be the only Korean (LCC)s to fly this route, although there is already a (LCC) service to Guam from South Korea’s largest gateway Seoul.
The Jeju Air (JJA) Busan - Guam flight will be 2x-weekly using Boeing 737-800s. This will complement the airline’s twice-daily flights between Seoul Incheon and Guam. The (JJA) received approval to fly to USA destinations in 2012, at which time it expressed its intention to fly to Guam from both Busan and Seoul starting that year.
Air Busan (ABN) filed its application to serve USA destinations in December. (ABN) intends to offer 4x-weekly flights to Guam, using either Airbus A320s or A321s. Air Busan (ABN) said it may introduce service to Hawaii or even USA mainland destinations, and also asked for permission to operate charter flights to USA airports. So far, no comments have been filed regarding the application.
Air Busan (ABN) is a subsidiary of major Korean carrier, Asiana Airlines (AAR). It serves international destinations in Japan, greater China, including Hong Kong and Macau — Taiwan, the Philippines, and Cambodia, see attached "ABN-Route Map - 2015-01.jpg."
Korean Air (KAL) also has a subsidiary (LCC), Jin Air (JIN). The (LCC) has flights from Seoul Incheon to Guam, and the parent airline serves Guam from both Incheon and Busan.
May 2015: News Item A-1: "Korean Transport Ministry is Pushing for Aircraft Age Limit" by Jeremy Torr, Air Transport World (ATW), May 22, 2015.
Korea’s Ministry of Land, Infrastructure, & Transport (MLIT) is urging all Korean airplane operators to replace or mothball all airplanes that are more than two decades old.
The (MLIT) said that eight of the country’s carriers had signed a Memo of Understanding (MOU) in which they “voluntarily agreed to replace all their airplanes that are 20 years old or older.”
The move comes following a spate of airplane maintenance issues in the region.
In April, Japan and Korea suspended charter flights from Thailand following an (ICAO) inspection, and two air operator’s certificates (AOCs) in the Philippines were withdrawn recently following a European Aviation Safety Agency (EASA) audit.
To date, Korean Air (KAL), Asiana Airlines (AAR), Air Busan (ABN), Jeju Air (JJA), Jin Air (JIN), Air Incheon (ICH), Eastar Jet (EJS), and T’way Air (TWY) have all agreed to the 20-year ruling.
The (MLIT) said the agreement was part of Korea’s “ongoing efforts to improve on airline safety.” The (MLIT) said records indicate that of 264 airplanes in service this month, some 14 are (MLIT)’s new voluntary age limit. These are four Korean Air (KAL) Boeing 747-400s, Air Incheon (ICH) 737-400Fs, and Asiana (AAR) 767-300 and 747-400F cargo airplanes.
Korean Air (KAL)’s average airplane age is 9.89 years; No 2 carrier, Asiana Airlines (AAR), has an average airplane age of 8.47 years, according to the Ministry.
Compared to the USA, Korean fleets are mere toddlers, the (MLIT) said, citing Delta Air Lines (DAL)’s fleet that has 234 airplanes 20+ years old, and American Airlines (AAL)’s fleet, which has 233+ airplanes of that age or more.
Although the (MLIT) noted that “there currently is no limit on the age or lifespan of an airplane,” it said the move would help improve both overall safety and efficiency.
September 2015: Asiana (AAR) has created a new low cost carrier (LCC), named Seoul Air (SEO). It illustrates the limits of Air Busan (ABN), which is 46% owned by Asiana (AAR), with the balance owned by the local Busan government and businesses. (ABN) has been a second-tier contender to independent Jeju Air (JJA) and Korean Air (KAL)-affiliate Jin Air (JIN), both based in Seoul. Air Busan (ABN) continues to operate a mixture of hand-me-down A321s and classic 737s, with the small number of each airplanes precluding scale. (ABN) says in a regulatory filing, it has seven Airbus aircraft (variant unspecified) on order through 2016, during which time, Air Busan (ABN) will retire its 737s.
Korea's high-speed train the (KTX) plies the Busan - Seoul corridor, offering more frequency at typically shorter journey times and fares. Asiana (AAR) has handed the route over to Air Busan (ABN), whereas Korean Air (KAL) serves the flight with its own airplanes. Jin Air (JIN), affiliated with (KAL), does not fly between Busan and Seoul. While Asiana (AAR) as a group, may benefit from having a lower cost unit on what is surely an unprofitable flight, this does little for Air Busan (ABN)'s finances. (ABN) has upwards of 14 flights a day between Busan and Seoul Gimpo, in addition to nine flights from Busan to Jeju and six from Seoul Gimpo to Jeju.
These approximately 29 daily domestic round-trips compare to about 11 daily scheduled international round-trips. Busan to Fukuoka and Osaka Kansai are served double daily, but smaller points like Xi’an and Yanji are served twice a week. So while Air Busan (ABN)'s route map extends wide, the concentration is in the domestic market.
Asiana (AAR)'s current (CEO), Kim Soo Cheon was appointed on January 1st, 2014 and was formerly the (CEO) of Air Busan (ABN) – so he knows first hand what the airline can, and cannot, do. His pressure at Asiana (AAR) to develop a new (LCC) based in Seoul, affirms the limits on potential growth for Air Busan (ABN). Some of this was already apparent from its small network and inefficient fleet.
Asiana's official remarked of the segmentation: "The three carriers will have different roles (Asiana (AAR), the premium service provider; Air Busan (ABN), a local carrier operating routes linking Busan; and the new budget carrier, Seoul Air (SEO), which will have low-cost services based in Seoul."
It is unclear if the wording was meant to be precise, but the statement about Air Busan (ABN) ("a local carrier") suggests Asiana (AAR) does not see Air Busan (ABN) as a (LCC), which (AAR) uses to describe its new Seoul carrier. Official statistics and financials about Air Busan (ABN) are not detailed, but from its operations and other factors like limited ancillary revenue, it would be difficult to call Air Busan (ABN) a (LCC). That Asiana (AAR) potentially acknowledges this is an important, if overdue, step.
Seoul Air (SEO) would represent a firmer strategic move from Asiana (AAR) in the short-haul market. (AAR) has been worried it is over-exposed to this segment with a likely deteriorating outcome as the competitive dynamics, such as from (LCC)s, increase. (AAR) for some time has planned to grow long-haul (with new A380s and A350s) to re-balance.
December 2015: News Item A-1: Air Busan (ABN)is looking to file an initial public offering (IPO) by end of 2016 to raise more than >KRW100 billion/$86.3 million for acquisition of new aircraft.
News Item A-2: Air Busan (ABN) applied to the USA Department of Transport (DOT) for a USA flight permit earlier this year, citing both West Coast and Hawaii as potential destinations.
April 2016: A321-231 (2226, HL7730), ex-(D-AVZU), (CIT) Aerospace (TCI) leased.
June 2016: 2 A320-232 (2422, HL8065; 2430, HL8066), EX-(N676AW, N677AW), (DEA) leased.
November 2016: A321-231 (2247, HL7731), ex-(D-AVZG), (DVB) Bank leased.
January 2017: A321-231 (2927, HL8073), ex-(D-ANJA), Aviation Capital Group (CGP) leased.
Click below for photos:
2 737-48E (CFM56-3C1) (2791-25772, /96 HL7508; 2816-25771, /96 HL7510; 2909-25774, /97 HL7517), (AAR) WET-LSD 2009-05. 25722; RTND 2016-04. 162Y.
3 737-58E (CFM56-3C1) (2614-25767, /94 HL7232; 2724-25768, /95 HL7233; 2737-25769, /95 HL7250), (AAR) WET-LSD 2009-02. 127Y.
1 A320-232 (V2527-A5) (2840, HL7745), HONG KONG AIRCRAFT LSD 2014-12. 8C, 135Y.
1 A320-232 (V2527-A5) (2943, /06 HL7753), (AAR) LSD 2012-11. 8C, 135Y.
1 A321-231 (V2533-A5) (1174, /00 HL8236), (AAR) LSD 2011-01. 195Y.
1 A321-231 (V2533-A5) (1670, /02 HL7712), EX-(M-ADBM). 195Y.
1 A321-231 (V2533-A5) (1734, HL7713), EX-(D-AVXD), AERCAP (DEA) LSD 2014-07. 195Y.
1 A321-231 (V2533-A5) (1970, /03 HL8213), (AWW) LSD, (AAR) WET-LSD (ABN) 2011-01. EX-(EI-LVB). 195Y.
1 A321-231 (V2533-A5) (2043, HL7723), EX-(D-AVZC) 2013-04. 12C, 183Y.
1 A321-231 (V2533-A5) (2226, HL7730), EX-(D-AVZU), (TCI) LSD 2016-04.
1 A321-231 (V2533-A5) (2247, HL7731), EX-(D-AVZG), (DVB) BANK LEASED 2016-11. 12C, 183Y.
1 A321-231 (V2533-A5) (2927, HL8073), EX-(D-ANJA), AVIATION CAPITAL GROUP (CGP) LEASED 2017-01.
1 A321-232 (V2530-A5) (1227, /00 HL7761 - - SEE ATTACHED - - "ABN-2012-05 - A321 INCDT"), (AAR) LSD 2012-03. EX-(N127AG). 12C, 165Y.
KIM SOO-CHEON, CHIEF EXECUTIVE OFFICER (CEO).
CHOI PAN-HO, EXECUTIVE DIRECTOR.