The results of the European Union (EU) competition authority’s review of the business combination of Korean Air (003490) and Asiana Airlines (020560) will be announced as early as the 13th. Korean Air’s corrective action plan to support the entry of alternative airlines is also expected to be released.
According to the industry, the EU competition authorities are expected to announce the review of the business combination as early as this evening, Korean time.
On December 6 of last year, the EU competition authority announced that it would “provisionally conclude the review of the business combination of Korean Air and Asiana Airlines by February 14, 2024.” Korean Air submitted a business combination report to the EU on January 13 last year, and the review accelerated by submitting a final corrective action plan in November, when the sale of Asiana Airlines’ cargo division was decided.
As Reuters has already reported that “the EU plans to conditionally approve Korean Air’s acquisition of Asiana Airlines,” citing a source familiar with the merger, conditional approval seems certain. The condition is the sale of Asiana Airlines’ cargo division and support for entry into alternative airlines on four European routes (Frankfurt, Germany, Barcelona, Spain, Rome, Italy, and Paris, France).
The key is how many slots (airport take-off and landing rights) and transportation rights will be transferred to domestic low-cost carriers (LCCs) in this process. T’way Air, the national carrier, is being mentioned as a likely replacement for Asiana Airlines, but the specific level of slots and transportation rights that will be transferred has not been disclosed.
Attention is also focused on whether T’way Air will participate solely as an alternative airline. As the EU competition authorities have expressed concerns about the sustainability of T’way Air, a corrective action plan may be issued in the future that leaves open the possibility of entry by foreign airlines.
As for cargo routes, Asiana Airlines has already decided to sell its cargo division, so the conclusion of a cargo supply agreement (BSA) for some routes from Japan to Korea imposed by the Japanese competition authority is expected to set a precedent.
Meanwhile, if the EU’s conditional approval is granted, the review of the business combination between the two companies, which began in November 2020, will receive approval from 13 of the 14 major countries excluding the United States. Korean Air plans to receive U.S. approval within the first half of this year.
Source: Donga
Mark Jones is a world traveler and journalist for News Rebeat. With a curious mind and a love of adventure, Mark brings a unique perspective to the latest global events and provides in-depth and thought-provoking coverage of the world at large.