Korean Air gets Japan’s approval on merger with Asiana Airlines

[Courtesy of Korean Air]

Korean Air Lines Co. said on Wednesday that the Japan Fair Trade Commission (JFTC) has granted approval for the merger with Asiana Airlines Inc., stepping closer to finalizing the deal after it gets a nod from the antitrust regulators in the United States and European Union.

According to Korean Air, the JFTC approved its proposed acquisition of Asiana Airlines. The decision has led Korean Air to have received approval from 12 out of the required 14 anti-trust regulating authorities.

Korean Air submitted explanatory materials to the JFTC in January 2021 and a draft report in August of the same year after conducting economic analysis and market research.

The two sides have since been in extensive discussions over a wide range of corrective measures, with the JFTC requesting remedial measures on Korea-Japan routes where market dominance might increase and restrict competition, given that Korean Air will integrate Jin Air Co., Air Busan, and Air Seoul Co. into a large low-cost carrier (LCC) upon merger with Asiana Airlines.

Korean Air excluded five of the 12 Korean-Japan passenger routes where the airlines’ operations overlapped, as these routes did not raise competition concerns.

Moreover, for four routes from Seoul (Seoul to Osaka, Sapporo, Nagoya, Fukuoka) and three routes from Busan (Busan to Osaka, Sapporo, Fukuoka), Korean Air agreed to transfer some slots to national low-cost carriers and other entering airlines (remedy takers), if they request to operate on these routes.

The JFTC also raised concerns on Korea-Japan cargo routes but did not request significant corrective measures except for the signing of a block space agreement (BSA) for certain routes from Japan to Korea, following Asiana Airlines’ decision to divest its cargo business.

The sale of Asiana Airlines’ cargo unit will proceed after Korean Air receives approval from all remaining competition authorities and incorporates Asiana Airlines as a subsidiary.

“We believe that the approval from the Japanese authority carries significant meaning, especially given our intense competition with Japan for dominance in Northeast Asia’s hub airports,” said a Korean Air official. “We expect that the latest approval will positively influence the pending decisions from the United States and EU.”

Korean Air plans to intensify its discussions with the EU and U.S. competition authorities to swiftly conclude the merger review process.