Korean Air announced on Wednesday that Japan’s antitrust regulator, the Japan Fair Trade Commission (JFTC), has approved the 1.8 trillion-won (US$1.34 billion) merger deal with its smaller rival, Asiana Airlines Inc. This marks a crucial step forward in the merger process between South Korea’s two full-fledged air carriers.
The merger, signed in November 2020, involves Korean Air acquiring a controlling stake in Asiana Airlines, with the aim of creating the world’s 10th-largest airline by fleet size. However, for the merger to be finalized, the airlines must secure approval from competition regulators in key markets.
To date, the companies have received approval from 12 countries, but the final green light is awaited from the European Union and the United States. Korean Air has actively engaged in dialogues with all concerned parties to address various concerns raised by the JFTC.
The JFTC, as part of its approval process, requested Korean Air to submit remedies concerning select routes between South Korea and Japan where the combined market share of Korean Air, Asiana Airlines, and their subsidiaries could potentially limit competition.
Korean Air has responded by deciding to cede a limited number of slots on seven routes, including those from Seoul to Osaka, Sapporo, Nagoya, and Fukuoka, as well as Busan to Osaka, Sapporo, and Fukuoka. The JFTC concluded that five of the 12 overlapping routes on the network were not subject to competition review.
The antitrust regulator also raised concerns about the bilateral cargo network. However, Korean Air addressed these concerns by deciding to divest Asiana’s cargo business. The JFTC limited its request for the airline to enter into a cargo block space agreement on select routes.
The divestiture of Asiana’s cargo arm is contingent on the approval of all remaining competition authorities and is scheduled to occur after Asiana Airlines is incorporated as a subsidiary of Korean Air, according to the company.
“Korean Air is committed to constructive dialogue with the remaining authorities—the EU and U.S.—to obtain approvals at the earliest opportunity,” stated Korean Air Chairman and CEO Cho Won-tae. In a New Year’s message to company employees earlier this month, Cho emphasized the commitment to completing the acquisition of Asiana Airlines in 2024, acknowledging that the process had taken longer than initially expected.
Source: EN YNA CO