A 5 Tril. Won Contract
Jeju Air, a low-cost carrier (LCC) operated by Korea's Aekyung Group, will introduce up to 50 new B737 MAX aircraft, Boeing’s latest model.
The budget carrier said in a public disclosure on Nov. 20 that it has placed a firm order for 40 B737 MAX 8 aircraft plus 10 options.
The acquisition cost of the 40 aircraft is about $4.4 billion (5 trillion won). The aircraft will be delivered between 2022 and 2026.
Jeju Air explained that the deal is part of its strategy to build a foundation for sustainable growth. It said the new aircraft will provide major savings in fuel and maintenance costs compared with its existing fleet of B737-800NGs.
The carrier said the new aircraft will also allow it to open up new routes to Singapore and Indonesia as its maximum flight range is 6,500 kilometers, more than 1,000 kilometers further than that of the B737-800NG.
As the fuel efficiency of the new model is 14 percent higher than the B737-800NG, it is expected to reduce the cost of aviation oil.
Jeju Air said some of its orders could be upsized to the larger B737 MAX 10 aircraft currently under development. The B737 MAX 10 can accommodate up to 230 passengers, while the B737 MAX 8 has 189 seats.
Jeju Air also announced that Boeing has promised to share responsibility for the fleet conversion and provide support for engine maintenance and parts supplies.
Jeju Air`s large-scale investment is based on its mid- to long-term strategy. The budget carrier intends to cut costs by purchasing aircraft and develop new routes by introducing longer-range aircraft.
Jeju Air currently operates 38 B737-800 aircraft, including 35 leased aircraft and three new aircraft purchased this year. By the end of the year, the company plans to bring in one more aircraft of the same type.
"The contract with Boeing will naturally replace our fleet with a next-generation aircraft, and provide us with a springboard for becoming a leading airline in the domestic aviation industry," a Jeju Air official said. "The new model’s superior performance and economics make it an ideal airplane to implement our growth strategy as we look to expand beyond Asia in the coming years."