The European Commission has approved Korean Air’s merger with Asiana Airlines, subject to certain conditions.
The European Commission launched an investigation into the merger in February 2023 and raised objections in May of the same year regarding competition concerns in the markets for passenger and cargo air transport services – notably between Seoul and Barcelona, Paris, Frankfurt and Rome.
The Commission stated:
“Korean Air and Asiana compete head-to-head in carrying cargo and passengers between the EEA and South Korea. Together, they would have been by far the largest carrier on these routes removing an important alternative for customers. Other competitors face regulatory and other barriers to expand their services and would have been unlikely to exert sufficient competitive pressure on the merged company. This would likely have led to increased prices or decreased quality for passengers and cargo customers.”
To address such concerns and “maintain a competitive environment in the relevant markets”, Korean Air has now agreed on the following commitments:
1. The divestment of Asiana Airlines’ cargo freighter business. The press release states that Korean Air will have to appoint an advisory firm, initiate the bidding process and select a buyer of the cargo business. It will then need to secure approval of the selected buyer from the European Commission, with the Commission adding that the buyer “must be able and have the incentives to operate the divested business in a viable manner and to compete effectively with the merged company.”
2. Provision of support to rival airline T’Way on the four overlapping passenger routes between Korea and the European Union. This support will include slots, traffic rights and access to the required aircraft. Korean Air will not complete the merger until T’Way begins to operate services from Seoul to Paris, Rome, Barcelona and Frankfurt.
The European Commission commented:
“These commitments fully address the competition concerns identified by the Commission. After collecting the feedback of customers and competitors during a market test of the proposed commitments, the Commission concluded that the commitments preserve effective competition in cargo and passenger transport between South Korea and the EEA.”
This means that Korean Air has obtained approval or completed the review process with 13 of the 14 regulatory authorities requiring business combination approvals, and is now just awaiting approval from the US competition authority.
