The European Commission (EC) has officially sanctioned the merger between Korean Air and Asiana Airlines, marking a significant milestone towards the consolidation of the two South Korean aviation giants. Announced on February 13, 2024, this approval is contingent upon the fulfillment of specific conditions aimed at preserving competition in the air transport sector. This makes Europe the 13th jurisdiction to approve the merger, leaving the United States as the final regulatory hurdle.
The EC’s endorsement follows its initial reservations regarding the potential competitive harm the merger could cause in air cargo services between Europe and South Korea, as well as passenger air services on select routes from Seoul to European destinations such as Barcelona El Prat, Paris CDG, Frankfurt International, and Rome Fiumicino.
Addressing these concerns, Korean Air proposed the divestiture of Asiana’s cargo division, including its freighter aircraft, slots, traffic rights, flight crew, staff, and customer contracts. This move has satisfied the EC’s conditions by ensuring that the merged entity does not monopolize the air cargo market between South Korea and Europe. The approval stipulates that Korean Air can only proceed with acquiring Asiana after the EC approves a suitable buyer for the cargo business.
Furthermore, to mitigate competitive concerns on specific passenger routes, Korean Air has committed to facilitating the entry of t’way Air into these markets by providing assets such as aircraft, slots, and traffic rights. This agreement ensures that t’way Air can begin operations on these routes, thus maintaining competitive balance. Korean Air has pledged not to finalize the merger until t’way Air commences services on these specified routes.
Margrethe Vestager, the EC’s Executive Vice-President in charge of competition policy, highlighted that the commitments by Korean Air to divest Asiana’s global cargo business and to enable t’way Air’s operation on key passenger routes effectively address the competition concerns.
Korean Air has outlined the steps involved in divesting Asiana’s cargo business, which includes appointing an advisory firm, initiating the bidding process, selecting a buyer, and obtaining EC approval for the buyer. The airline also indicated that t’way Air would gradually start operating on the four passenger routes later in the year, with comprehensive support from Korean Air.
With the EC’s approval now secured, Korean Air’s focus shifts to obtaining clearance from US antitrust authorities, with the aim of finalizing the merger promptly. This strategic merger is poised to reshape the competitive landscape of the aviation industry, both in South Korea and globally, ensuring continued service excellence and enhanced operational efficiency.
