Korean Air merger gets green light from Japan

Boeing 787-9 (Korean Air)

Korean Air said Wednesday that its planned merger with smaller domestic rival Asiana Airlines has gained approval from Japan’s antitrust regulator, with only two crucial decisions left to come from the European Union and the US.

According to the airline, the Japan Fair Trade Commission approved the deal worth 1.8 trillion won ($1.34 billion), the process of which has been being delayed for over three years amid monopoly concerns by foreign authorities.

The high-profile merger has received an OK from 12 authorities out of the required 14. According to industry sources, the final decision from the European Commission also could come in the coming weeks.

In January 2021, Korean Air initially provided explanatory data to Japanese authorities and submitted a draft report in August of the same year. Subsequently, discussions on some corrective actions have taken place over the following years.

According to Korean Air, the JFTC had requested the airline to provide solutions for specific popular routes between the two countries where the combined market share of Korean Air, Asiana Airlines and their budget airlines might restrict competition.

In order to obtain the approval, Korean Air reportedly gave up some routes, allocating them to smaller low-cost carriers.

The Japanese authority also raised antitrust concerns over the extended cargo business, but the issue was solved after Asiana Airlines decided to sell off its own cargo business.

Korean Air emphasized the significance of Japan’s approval for the potential merger, especially considering the country’s geographical proximity and intense competition for earning the status of a "Northeast Asia hub airport."

"We expect Japan's approval will positively influence the decisions of the US and EU authorities," Korean Air said in a statement.

By Kim Hae-yeon (hykim@heraldcorp.com)

By Kim Hae-yeon(hykim@heraldcorp.com)