EXTRANS GLOBAL - Air Freight News - Week 02 2025

Air Cargo General  

1)  Air Premia temporarily suspends joint operations with Alaska Airlines for the Americas.

• Air Premia has temporarily suspended its interline agreement (route coordination) with Alaska Airlines, the fifth largest airline in the U.S. This means that since the 1st, the sale of interline connecting flights with Alaska Airlines has been halted.
• Interline refers to a cooperative arrangement where multiple airlines partner to connect their respective routes and sell tickets as a bundle, allowing passengers to conveniently use multiple flights with a single ticket while airlines benefit from expanded routes and attracting connecting passengers.
• Air Premia signed an interline agreement with Alaska Airlines last July, connecting more than 110 domestic U.S. routes operated by Alaska Airlines and routes to five countries in Canada and Latin America.
• The suspension of the interline agreement has become inevitable as Alaska Airlines has established a new route strategy, including reducing overlapping routes, following its acquisition of Hawaiian Airlines at the end of last year.
• An Air Premia official stated, "As Alaska Airlines and Hawaiian Airlines merge, they are internally restructuring their route and partnership strategy, leading to this temporary suspension."
• Meanwhile, Air Premia has been operating a total of 25 interline routes with Korean Air on routes to the Americas since May of last year.

2)  Can Air Busan, which is about to integrate, maintain its status as a Busan-based airline?

• Korean Air, which has completed its merger with Asiana Airlines, is expected to actively pursue the integration of Air Busan along with two other low-cost carriers (LCCs), drawing attention to the preservation of a regional base airline in Busan.
• According to reports from the Busan city government and Air Busan, the airline will hold an extraordinary shareholders' meeting on the 16th to appoint a new management team.
• Executives from Korean Air, including Jeong Byeong-seob, head of the passenger sales department (executive director), Song Myeong-ik, head of the corporate merger task force (executive director),
• And Seo Sang-hoon, head of finance (executive director), are expected to take on management roles at Air Busan.
• While the integration of Korean Air, Asiana's subsidiaries Jin Air, Air Seoul, and Air Busan is gaining momentum, the demand for maintaining a base airline in Busan remains uncertain.
• Proposed measures to preserve a base airline in Busan include attracting the headquarters of the integrated LCC, selling Air Busan separately, and establishing an independent Busan airline.
• The Busan city government sees attracting the headquarters of the integrated LCC as the most realistic alternative if Korean Air proceeds with the integration of the three LCCs.
• Organizations like Citizens for Future Society and the Gadeokdo Hub Airport Citizen Promotion Group have urged, "With the merger of Korean Air and Asiana Airlines, the likelihood that the integrated LCC headquarters will move to Incheon has increased. Busan city and the local business community must act now to initiate the separate sale of Air Busan."
• They argue, "Busan has the experience of establishing and nurturing Air Busan and has the advantage of the upcoming opening of Gadeokdo New Airport. If the separate sale of Air Busan, desired by Busan citizens, does not happen, a new airline based in the region called 'Busan Air' should be established."

3)  Asiana's Vacancy: Who Will Fill It? - LCCs Preparing for FSC  

• With the merger of Korea's two major full-service carriers (FSCs), Korean Air and Asiana Airlines, attention is turning to the vacant second-place position in the airline industry. Jeju Air, which was defending its top position among low-cost carriers (LCCs), is now hunkering down due to the Muan passenger plane tragedy, prompting competitors to prepare to seize the opportunity.
• Recently, T'way Air has begun securing the requirements traditionally expected of FSCs, preparing for growth.
• T'way Air has started operating European routes, which were previously exclusive to FSCs, by taking over four routes as part of the merger approval requirements between Korean Air and Asiana Airlines. Starting in 2028, T'way plans to operate maintenance facilities, including a hangar, in the advanced complex aviation zone at Incheon International Airport, becoming the first LCC to do so.
• Since the LCC business model focuses on cost reduction, many LCCs have outsourced their maintenance, repair, and overhaul (MRO) services instead of establishing their own facilities. However, T'way Air has decided to construct a hangar worth 150 billion KRW, planning to perform maintenance primarily on its own aircraft for the first three years and then outsource maintenance to domestic airlines starting from the fourth year. This marks a significant step toward becoming a full-fledged medium- to long-haul airline.
• To attract long-haul route customers, T'way Air is also expanding its membership program. In June, it added "Prime" and "Platinum" memberships specialized for long-haul routes to its subscription-based membership "T’way Plus." This aligns with the mileage-based loyalty strategies employed by many FSCs operating long-haul routes, providing corresponding services.
• T'way Air may have the potential to join the "Star Alliance," the world's largest airline alliance formed in 1997, which currently only includes Asiana Airlines in Korea. The advantage of membership is the ability for airlines to cross-utilize each other's miles, but the membership conditions are stringent and the annual fees are substantial, making it practically impossible for anyone other than FSCs to join. Recently, Star Alliance introduced a "Connecting Partner" program to allow smaller airlines to partner with the alliance. If T'way Air successfully joins Star Alliance, it could easily shed its LCC status.
• T'way Air is not the only LCC operating long-haul routes. While T'way is shifting its identity toward long-haul routes in Europe and the Americas, Air Premia initially launched with a focus on long-haul services.
• Air Premia is also preparing to elevate itself to a mid-sized airline, setting a goal to increase its fleet of medium- to long-haul aircraft to 20 by 2030.

4)  Mexico Introduces 'Pinpoint Tariffs' for E-commerce Companies from China – Global Trade War Rekindled

• Mexico has introduced strong tariff policies on low-value imports from China, represented by companies like Temu and Shein. This move is seen as a strategy to improve relations with the U.S. ahead of Donald Trump's inauguration as President.
• The Mexican tax authority has imposed new tariffs of 17-19% on low-value packages imported via courier starting from the 1st of this month. Specifically, products from China that do not have international treaties with Mexico will uniformly incur a 19% tariff.
• Imports from USMCA (United States-Mexico-Canada Agreement) member countries, such as the U.S. and Canada, will face a 17% tariff for goods valued between $50 and $117. Previously, these low-value shipments were exempt from tariffs. This measure aims to curb the ability of Chinese e-commerce companies to exploit tax-free thresholds in various countries to distribute low-cost products in bulk.
• Until now, Chinese e-commerce platforms and U.S. importers have been able to avoid tariffs by importing goods from China to Mexico and then sending them in single shipments to the U.S. This was made possible by utilizing the "Section 321" provision, which allows goods under $800 to enter the U.S. duty-free.
• Particularly, U.S. e-commerce companies have widely adopted this strategy to leverage Mexico's low labor costs and favorable logistics environment.
• This new measure is expected to directly weaken the price competitiveness of Chinese online companies. They have previously targeted the Mexican market by promoting low-cost products through reduced shipping and handling costs. However, there are concerns that the sudden imposition of tariffs could backfire on the Mexican economy.

5)  GSA and Airline Trends

• Asiana Airlines launches a new route from Incheon to Prague. Starting April 1, there will be three weekly flights on Tuesdays and Thursdays using the A350 aircraft

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