Air PREMIA, a new commercial air carrier in South Korea, officially announced on Monday that it closed a $ 22 million Series A financing round on September 7.
The round was led by Capstone Asset Management, Yuanta Investment, Winvest Venture Investment and some of its anchor investors; Mr. Sung Bum Hong, a founder of Hugel, the Korean American Chamber of Commerce of Los Angeles, and Fast Investment participated in the follow-up round, Series A, since they positively evaluated the company's growth potential.
To date, Air PREMIA has raised $ 33 million with their previous round bringing in $ 11 million in seed and anchor rounds which included investments from founding members, Mr. Dok soo Jang, a chairman of DS Asset Management, Mr. Hong, the KACCLA, and Fast Investment. Air PREMIA is planning to secure $89 million in total by additionally raising $ 56 million through Series B round after receiving approval of Air Carrier License from the government authority.
The amount of total equity, $ 33 mm, has surpassed the minimum capital requirement that new commercial airlines should secure before applying for the license. The Korean government has announced a strengthened standard increasing the capital requirement from $13 million to $27 million earlier this year via pre-announcement of legislation. Air PREMIA plans to submit a license application in September and launch its commercial flight in the first half of 2020 under the condition that the certification process proceeds timely.
“Series A round has successfully closed thanks to the consensus among the investors that it is the best time for a medium and long-haul carrier embark on business,” Jong Chul Kim, co-founder, and CEO of Air PREMIA said. "This new funding will allow us to continue to grow our team and deliver our unrivaled service to customers around the globe to make premium air travel experience more affordable and attainable."
Air PREMIA claims themselves as a Hybrid-Service-Carrier providing customer-focused service, comfortable seats, free snacks, and delightful in-flight entertainment options at a lower price than full-service-carriers. The industry-disrupting airline offers two-class configurations; Premium Economy (PE) class brings 42 inches pitch with business class level services such as priority check-in, boarding, and baggage handling. Economy seat pitch will be 35 inches, the widest economy seats in class. The ticket price of economy seats of Air PREMIE is set to 80 ~ 90% of full-service-carriers’ economy class, and Premium Economy ticket price will be set to 50% of an average business class.
Most of the routes are strategically comprised of more than six hours flights and targeted primarily to high-demand destinations where yet undeveloped by incumbent full-service-carries. Air PREMIA follows a single fleet configuration strategy introducing the latest model of wide-body aircraft with 300 seats, such as the Boeing 787-9 and the Airbus 330-NEO.
A former Chief Executive Officer of Jeju Air, Korea’s top-tier low-cost-carrier, Jong Chul Kim is leading Air PREMIA with a group of professionals including flight operation, safety, and maintenance executives. Kim possesses a strong reputation in the airline industry since he built up a robust turnaround track record for Jeju Air by restructuring unprofitable operating system and pioneering new international routes.
Air PREMIA defined a medium and long-haul international route market as untapped new market spaces. Since GDP per capita of South Korea about to surpass $30,000, demand on long-haul travel has grown exponentially. Medium-to-long haul seats in recent years, however, couldn’t meet the growing demand as the suppliers were limited to two Korean full-service-carries. Therefore, Korean airlines allowed non-Korean airlines to penetrate the long-haul flight market: the flight passengers load factor over five hours has increased from 75% to 81% over the past six years; while the non-Korean airline market share has risen from 31% to 38%, and Korean airlines have grown 4% CAGR, which is less than half of the growth of non-Korean airlines. Air PREMIA believes the medium and long-haul flight market in Korea has a high potential to grow.