Korean Air Faces Global Antitrust Regulators' Monopoly Worries Over Asiana Airlines Merger

Strategic Insights -

The planned merger between Korean Air and Asiana Airlines has raised concerns from global antitrust regulators, prompting Transport Minister Won Hee-ryong to urge the company to address these concerns. Regulators in 14 countries, including the European Union, the United States, and Japan, are reviewing the merger. The European Commission has stated that the merger may restrict competition in passenger and cargo air transport services between the EU and South Korea. In contrast, Korean Air claims that the merged company will not hold a monopoly, citing a combined market share of less than 40% at Incheon International Airport.

Key Takeaways:

  • Korean Air has submitted documents to antitrust regulators in 14 countries, with approval from 11 countries, including Britain, Australia, Singapore, Vietnam, Turkey, and China.
  • The European Commission has initiated a preliminary review, stating that the proposed acquisition of Asiana Airlines may restrict competition in passenger and cargo air transport services between the EU and South Korea.
  • A U.S. report suggests that the Department of Justice is considering suing to block the merger due to competition concerns.
  • Minister Won Hee-ryong has urged Korean Air to address global regulators' monopoly worries and come up with measures to resolve these concerns.
  • The South Korean government has taken efforts to prevent merged companies from wielding monopoly power, including banning air carriers from raising passenger and cargo transportation charges above inflation rates.
  • Korean Air has stated its willingness to make concessions to international regulators to facilitate the merger.
  • The company's Chairman and CEO, Cho Won-tae, has expressed confidence in convincing regulators to approve the merger.

Statistics:

  • 40%: Korean Air's and Asiana Airlines' combined market share of passenger and cargo slots at Incheon International Airport.
  • 70.3%: Passenger travel on international routes, excluding Larger China and Russia, that had recovered to pre-pandemic levels at the end of May.
  • 80%: Passenger travel on international routes, excluding Larger China and Russia, that had rebounded to pre-pandemic levels at the end of May.
  • 100%: Korean Air's commitment to making concessions to international regulators to facilitate the merger.

Sources:

  • Yonhap News Agency
  • European Commission
  • U.S. Department of Justice
  • Korean Air Co.
  • International Air Transport Association (IATA)
  • Airports Council International