Korean Air Moves Toward Completing Asiana Buy
Korean Air is confident that it can finalize the acquisition of domestic rival Asiana Airlines this year, after taking some significant steps in December towards gaining the approvals it needs from foreign governments.
China’s Commerce Ministry approved the Korean Air-Asiana merger on Dec. 26. The ministry required certain measures to mitigate potential harm to competition. The merged carrier must transfer slots to airlines wishing to start services on nine routes operated by both Korean Air and Asiana.
Five of the nine routes were already included in the requirements of South Korea’s Fair Trade Commission, and another four routes were added by Chinese authorities.
On Dec. 8, UK authorities indicated they intend to approve the merger. The UK Competition and Markets Authority (CMA) gave notice that it proposes to accept the mitigation measures offered by Korean Air, subject to a final consultation. This avoids the need for a deeper second-phase investigation.
The CMA had previously expressed concerns about the effect of the merger on competition in the UK-South Korea market. To address this, Korean Air offered to make London Heathrow (LHR) and Seoul Incheon (ICN) slots available to Virgin Atlantic or another carrier so they can enter this market.
South Korean authorities have already approved the acquisition and the measures offered by Korean Air to preserve competition. The carrier is also seeking clearances from foreign governments in countries served by both Korean Air and Asiana.
In an address to employees, Korean Air CEO Walter Cho described 2023 as a “pivotal year” for completing the Asiana takeover. “We are in the last stage[s] with the remaining overseas competition authorities [which are] reviewing the merger,” Cho said.
Cho had said in June 2022 the carrier was hoping to obtain the necessary approvals by the end of 2022. But the regulatory process in some countries has taken longer than expected.
Cho said the Chinese approval will “play a positive role in the review process of the remaining competition authorities.”
Korean Air sent its applications for approval to a number of countries in January 2021. This included nine jurisdictions where such reporting is mandatory. Approval has been granted by China, South Korea, Turkey, Taiwan and Vietnam. Thailand confirmed that approval was not required.
Three other jurisdictions have yet to issue approvals: the EU, Japan and the US.
In addition, Korean Air sent reports on its proposed merger to countries where such submissions are voluntary. Of these, Australia, Malaysia and Singapore have given clearance for the merger, with the UK’s final decision still pending.