Concerns are rising over a long delay in the merger between Korean Air and Asiana Airlines.
In particular, experts have pointed out that the biggest problem is the delay in review by fair trade authorities in overseas countries.
Reviews of the business combination between Korean Air and Asiana Airlines were underway in the United States, the European Union (EU), Japan, and China.
These are mandatory reporting countries. The United Kingdom and Australia will yield resultsamong the voluntary reporting countries.
In February of last year, starting with Turkey, decisions were made in favor of the merger by Taiwan, Thailand, Vietnam, Singapore and Malaysia.
In February of this year, Korean Air received conditional approval for the business combination from the Korean Fair Trade Commission.
Originally, Korean Air had planned to become a full service carrier (FSC) next year after acquiring Asiana Airlines shares on June 30, 2021 and operating it independently as a subsidiary of Korean Air for two years.
However, the plan fell through as the Korean Fair Trade Commission delayed its business combination review.
Industry insiders believe that the belated decision made by the Korean Fair Trade Commission may have had an impact on major overseas reviewing countries’ reviewing processes.
In fact, no country has given Korean Air approval after the conditional approval by the Korean Fair Trade Commission.
Singapore gave its approval on Feb. 9, which was also before the Korean Fair Trade Commission’s decision.
Those in the aviation industry are paying close attention to the FTC’s decision. “There is a possibility that foreign countries will also use the Korean FTC's decision as a guideline,” an aviation industry official said.
Some analysts say that each country is intentionally delaying making a decision in order to foster and protect its own aviation industry.
In the case of the United States, Unite Airline, the country’s second-largest airline, raised the issue of restrictions on fair competition with the U.S. Department of Justice.
As a result, there have been reports that the U.S. Department of Justice raised the level of its review. It is also burdensome that the European Union (EU) as well as the United Kingdom (UK) and Australia are demanding their carriers’ entries into the Korean air service market to address monopoly issues that can be caused by the marriage between Korean Air and Asiana Airlines.
Korean Air's cargo plane Boeing 747-8F is being inspected.
In particular, they see China as a bigger variable compared to other countries. This is because, in the case of China, it may take issue with the business combination in order to protect its own aviation industry or due to political factors with the Korean government.
Aviation industry experts say that Korean Air needs to make sophisticated approaches to China or the EU as they may make sudden and unexpected decisions.
“If political relations between South Korea and China deteriorate, they will adversely affect the business combination between Korean Air and Asiana Airlines,” they added.” The variable makes this issue complicated and hard to expect.”
Cho Won-tae, chairman of Korean Air, expressed strong confidence that Korean would be able to finally receive the green light this year.
“We expect to receive approval from the US and EU by the end of the year at the latest,” Cho said in a press conference during the General Assembly of the International Air Transport Association (IATA).
Aviation industry experts say that it is urgently needed for Korea Air to wrap up its merger with Asiana as soon as possible in order to sharpen the competitiveness of Korea’s aviation industry.
Meanwhile, Korean Air is operating a group of experts made up of 100 people from five teams to obtain approval for the business combination from competition authorities in each country.
The Korean airliner is using three global law firms to oversee progress in overseas competition authorities’ reviews, eight local law firms to closely respond to each country’s review, three economic analysis firms to secure objectivity and expertise, two professional consulting firms to establish negotiation strategies and make political approaches.
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