The sale of full-service carrier Asiana Airlines Inc. is expected to spur M&A wave across the overcrowded passenger aviation market in Korea.

Korean Air Lines could feel threatened after its sole full-service rival Asiana becomes refueled under cash-strong new owner Hyundai Development and Mirae Asset Daewoo.

Aekyung Group and activist fund KCGI who had eagerly chased Asiana could also seek for new M&A opportunities.

Aekyung Group that operates the country’s largest budget carrier Jeju Air is intent on scaling up its size.

KCGI, the second-largest shareholder of Hanjin KAL which is the parent company of Korean Air Lines, also would not want to miss out on the momentum to build its influence over the airline industry based on its funding ability. It has successfully raised 2 trillion won for financing the latest takeover bid for Asiana Airlines.

Worsening market conditions amid intensifying competition among low-cost carriers demand restructuring in the industry. Slowed global economy and soured relationship with Japan have dampened air passenger and cargo demand.

The LCCs have entered a bust cycle and are grappling with snowballing losses due to reduced choices in the short-haul destinations with Japan and turbulent Hong Kong off the list.

Eastar Jet, a Korean budget carrier, recently has denied the widespread rumors that it is looking for a new owner, but market analysts are flagging the possibility that any of local LCC names including Eastar Jet could soon be put up for sale under current unfavorable business conditions.

By Han Woo-ram and Lee Ha-yeon

[ⓒ Pulse by Maeil Business Newspaper & mk.co.kr, All rights reserved]