Korean Air and Asiana Airlines Merger Receives EU Approval, Signaling Major Progress

Major Step Completed as Korean Air and Asiana Airlines Merger Receives EU Approval

Korean Air and Asiana Airlines, two of South Korea’s largest airlines, have successfully cleared a significant hurdle in their merger process. The European Union (EU) competition authorities are currently in the process of drafting the approval draft for the merger, indicating positive progress in the merger proceedings. The EU’s approval is considered a crucial milestone in the merger process, providing a sense of relief and reassurance to the aviation industry.

EU Approval and Conditions

According to reports from Reuters and other sources, it appears that the EU competition authorities are likely to approve the merger between Korean Air and Asiana Airlines. However, this approval is expected to come with certain conditions aimed at addressing concerns related to market dominance. These conditions may include the requirement for Asiana Airlines to sell its cargo business and transfer slots on specific routes such as Barcelona, Frankfurt, Paris, and Rome. It is important to note that this approval is still pending as the finalization of the merger agreement is yet to be completed.

Implications for Low-Cost Carriers (LCCs)

The approval of the merger also has implications for the low-cost carriers (LCCs) operating in South Korea. LCCs such as Jeju Air and Eastar Jet have expressed interest in acquiring some of Asiana Airlines’ long-haul routes and cargo business. This potential change in the aviation landscape has led to increased interest and activity among LCCs, as they seek to benefit from the opportunities arising from the merger.

Evaluation from the United States and Japan

The evaluation of the merger by the United States and Japan is also eagerly awaited. Industry experts anticipate positive results in the evaluations expected to be announced in the first half of this year. The presence of other competitors in the US market and multiple LCCs in Japan adds to the likelihood of positive evaluations. These evaluations will further solidify the progress of the merger and lay the groundwork for its successful completion.

Impact on the Aviation Industry

Upon completion, the merged entity will become the 7th largest airline globally, cementing its dominant position in the South Korean aviation industry. This will create a competitive landscape where Korean Air, along with nine smaller LCCs, will vie for market share. Furthermore, the merger presents an opportunity for domestic LCCs to expand their flight routes, potentially causing price fluctuations and attracting price-sensitive travelers.

Next Steps and Conclusion

While an official announcement is expected in early to mid-February, it may take additional time for the merger process to be finalized. The EU Commission requires time to review the final opinions of member states, contributing to the extended timeline. Successfully passing the rigorous scrutiny of the EU is a significant milestone, propelling Korean Air and Asiana Airlines towards a unified future.

Overall, the merger between Korean Air and Asiana Airlines marks a significant development in the South Korean aviation industry. As the merger process progresses, attention now turns to the finalization of merger conditions, potential impact on LCCs, and subsequent measures required to create a stronger and more competitive airline.

Source: Hankyung Economy