The European Commission has announced it approved the merger between Korean Air and Asiana, on several conditions. As the two airlines were direct competitors, the conditional approval is meant to safeguard European travellers from the lack of competition that would have resulted had the merger been left unchecked.
Following an in-depth investigation that was launched on 17 February 2023, the Commission found that Korean Air, South Korea’s largest airline, and Asiana, the country’s second largest airlines, compete head-to-head in carrying cargo and passengers between the European Economic Area (EEA) and South Korea. Together, they would have been by far the largest carrier on these routes removing an important alternative for customers, particularly on routes from Seoul to Barcelona, Paris, Frankfurt and Rome.
Since other competitors face regulatory and other barriers to expand their services and would have been unlikely to exert sufficient competitive pressure on the merged company, the acquisition of Asiana by Korean Air would have likely led to increased prices or decreased quality for passengers and cargo customers. To address these concerns, Korean Air agreed to sell Asiana’s cargo division and facilitate the entering to the market of a competitor budget airline.
“Korean Air committed to the divestment of Asiana’s global cargo freighter business to a suitable purchaser; and to the divestment of assets to facilitate the entry of rival airline T’Way on key passenger routes. These remedies effectively address our concerns, and will ensure fair competition and consumer choice in this vital sector”, said Margrethe Vestager, European Commission Executive Vice-President in charge of competition policy.
For the implementation of the cargo commitments, Korean Air and Asiana will need to take several steps, such as appointing an advisory firm to oversee the divestment, as well as initiating the bidding process and selecting a buyer of the cargo business. The European Commission will have to approve the selected buyer for the merger to be completed. Once Korean Air completes the acquisition of Asiana Airlines, the actual cargo divestment process will take place.
As for the passengers, T’way Air has been appointed as the “remedy taker” on the four routes from South Korea to Europe. Starting from the second half of this year, T’way Air will gradually initiate operations to Barcelona, Paris, Frankfurt and Rome, and, from 16 May, from Seoul to Zagreb. Korean Air has to provide T’way with all the necessary assets to enable it to start flight operations on the four overlap routes, including slots and traffic rights as well as access to the required aircraft.
The merger has already been approved by TĂĽrkiye, Taiwan, Thailand, the Philippines, Malysia, Vietnam, South Korea, Singapore, Australia, China, the UK, Japan and now the EU. The only country Korean Air is still waiting approval from is the US.
