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Seoul rejects Fly Yangyang and Aero K license applications

South Korea’s transport ministry has rejected license applications from prospective budget carriers Fly Yangyang and Aero K, citing concerns about their financial strength and competition in the market.

The rejections followed advice from a committee that recommended the minimum capital requirement for new carriers be raised to W30 billion ($27.9 million), up from 15, and the minimum number of aircraft rise from three to five.

The ministry also pointed to the tough market conditions in the North Asian market, which was the major focus of both Aero K - which was formerly known as KAIR Airlines - and Fly Yangyang. That has been caused by a diplomatic standoff between Beijing and Seoul that has seen new flight applications between the two countries blocked, and tourism slow to a trickle.

Low-cost carriers have come under close scrutiny in recent years in Korea following a series of safety incidents and a slew of disrupted flights.

Fly Yangyang has now had its license application denied twice, leaving the future of the Yangyang-based startup in doubt. Few details of the carrier are known, though its website shows that it has been seeking interest from foreign pilots to fly a prospective fleet of Boeing 737s.

Areo K placed a firm order for eight Airbus A320s in March 2017, and had been planning to commence services in 2018 to China, Taiwan and Japan from its Cheongju base.

Hanwha Group is understood to have invested around $14 million in Aero K, while industry sources also say that German advisory group and airline investor Intro Aviation is also involved.

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