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  • Writer's pictureMalcolm Lu

Korean Air & Asiana Merger Update



 

On February 13, the European Commission (EC) granted its conditional consent to the merger of Korean Air and Asiana Airlines. This approval is contingent upon the airlines adhering to specific commitments made in agreement with the EC. Consequently, Korean Air has now secured approval from or completed the evaluation process with 13 out of the 14 regulatory bodies overseeing such business consolidations.


Approved/Concluded (13)

  • Türkiye (Feb 2021), Taiwan (May 2021), Thailand (May 2021), The Philippines (May 2021), Malaysia (Sep 2021), Vietnam (Nov 2021), Korea (Feb 2022), Singapore (Feb 2022), Australia (Sep 2022), China (Dec 2022), United Kingdom (Mar 2023), Japan (Jan 2024), European Union (Feb 2024)

Pending Approval (1) : United States


Korean Air initiated discussions with the EC in January 2021, followed by the formal submission of a merger notification in January 2023. The EC commenced a Phase II evaluation of the merger in February and issued a Statement of Objections in May, expressing competition concerns in both passenger and cargo markets as a result of the merger.


To address the competition concerns raised, certain commitments have been proposed, primarily consisting of the divestiture of Asiana Airlines' cargo freighter business, and facilitating the entry of a new airline on the four overlapping passenger routes between Korea and the European Union. These measures aim to sustain a competitive landscape in the relevant markets.


For the execution of the cargo commitments, Korean Air and Asiana Airlines will need to undertake various actions, including engaging an advisory firm to oversee the divestment process of Asiana Airlines’ cargo freighter business, initiating the bidding process, and selecting a buyer for the cargo business. Approval from the EC of the selected buyer is necessary to finalize the airlines’ merger. Following Korean Air's acquisition of Asiana Airlines, the actual cargo divestment process will proceed.


Regarding the passenger commitments, T'way Air has been designated as the “remedy taker” for the specified European passenger routes. Starting from the latter half of this year, T'way Air will gradually commence operations on the four routes: Seoul Incheon-Paris, Seoul Incheon-Rome, Seoul Incheon-Barcelona, and Seoul Incheon-Frankfurt. Korean Air intends to offer comprehensive support to T’way Air.


With the approval from the EC secured, Korean Air remains committed to ongoing discussions with the U.S. competition authority to expedite the completion of the overall merger review processes.


 

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