The Fair Trade Commission (FTC) gave the go-ahead to Korean Air’s merger with the debt-ridden Asiana Airlines, with some preconditions.
The antitrust regulator’s decision moves the birth of a super-size national flag carrier to fruition.
On the other hand, the FTC’s preconditions, which claim the merger could hurt competition on some routes, are feared to weaken the competitiveness of the Korean aviation industry.
FTC said on Feb. 23 the commission gave the conditional approval to the two airlines’ combination, but they must give up coveted landing slots and readjust flight licenses on core flight routes such as ones to New York and Paris.
The antitrust regulator ordered the two airlines to lower their combined market share on 26 international routes and 14 domestic routes.
At the same time, FTC also ordered them not to raise ticket prices until the corrective measures are completed.
As a result, the two airlines should take the corrective measures on the flight routes in which their combined market share tops 50 percent for 10 years after Korean Air’s acquisition of Asiana’s shares.
If a new airline wants to enter, or an existing one want to raise the frequency of flights, Korean Air and Asiana Airlines should give up some of the landing slots they have at Korean airports.
Out of the 26 international routes, 11 are non-liberalized ones, under government-to-government airline pacts.
A view of Korean Air Boeing 787-9 and Asiana Airlines A350. (Photos: Korean Air, Asiana Airlines)
If a new carrier wants to enter, or an existing one wants to increase the frequency of flights, the two Korean airlines should give up some flight licenses.
They include some routes between Seoul and Europe (Frankfurt, Rome, London, Paris and Istanbul) and between Seoul and China (Zhangjiajie, Xian and Shenzhen), between Seoul and Jakarta, between Seoul and Sydney, and Busan and Beijing.
FTC found that the merger could hurt competition at 14 domestic routes flying between Gimpo and Jeju and Busan.
FTC also told the two airlines their air fares will be restricted when it comes to inflation compared to the pre-COVID-19 pandemic levels in 2019.
They will be banned from reducing the number of seats and they will have to maintain the quality of services such as free baggage.
Korean Air requested antitrust regulators of 14 other countries, including the U.S., the European Union and China to review its merger with Asiana Airline in February 2021.
Eight countries so far, including Singapore, Turkey and Vietnam have greenlit the merger.
Korean Air said in a statement, “We accept FTC’s decision and will do our utmost to obtain a go-ahead from other regulatory authorities.”
If the takeover is completed, Korean Air, now the world’s 18th-largest carrier by fleet, is expected to become the world’s 10th-biggest one.
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