Korean Air-Asiana Merger Receives Approval from Japan’s Fair Trade Commission
Japan’s Fair Trade Commission (JFTC) has officially approved the highly anticipated merger between Korean Air and Asiana Airlines, marking a pivotal advancement towards the consolidation of the two South Korean aviation giants. This approval represents a critical step forward for Korean Air, which has termed the JFTC’s green light as “a significant milestone” in the merger process. With Japan’s consent secured, attention now turns to the remaining regulatory hurdles in the United States and the European Commission, where decisions are eagerly awaited.
The merger, valued at KRW1.8 trillion (approximately USD1.35 billion), entails Korean Air acquiring a 63.9% stake in Asiana Airlines, with plans to integrate Asiana’s operations into its own. The success of this deal hinged on obtaining antitrust approval across 14 key markets where Korean Air operates, including Japan. The JFTC’s approval signals a significant vote of confidence in the merger’s compliance with competitive standards and practices in one of these essential markets.
As part of its commitment to maintaining competitive balance, Korean Air has agreed to relinquish slots on seven specific routes should any competitors express interest in them. These routes include several key connections between Seoul Incheon and various Japanese destinations such as Osaka Kansai, Sapporo Chitose, Nagoya Chubu, and Fukuoka, as well as international routes from Batumi to Osaka, Sapporo, and Fukuoka. This concession addresses initial concerns raised by the JFTC regarding competition on 12 city pairs, which were subsequently narrowed down to seven.
Furthermore, the merger’s impact on the Korea-Japan cargo network was a point of contention, leading to Korean Air’s decision to divest Asiana’s cargo business. This move aims to alleviate competition concerns, with the JFTC specifically requesting that Korean Air enter into a cargo block space agreement on selected routes from Japan to Korea. The divestiture of Asiana’s cargo division is contingent upon approval from all remaining competition authorities and will be implemented following Asiana Airlines’ official incorporation into Korean Air.
In its statement, the JFTC clarified that the merger does not pose a substantial risk of stifling competition within any specific trade fields, thereby endorsing the transaction’s compliance with Japanese antitrust laws.
Looking ahead, Korean Air remains optimistic about securing approval from the European Commission in the coming weeks, following significant concessions agreed upon by both Korean Air and Asiana. However, the merger faces a more challenging review process in the United States, where authorities may demand additional adjustments to the airlines’ networks and operational strategies.
This merger’s progression through various international regulatory landscapes underscores the complex interplay between ambitious corporate strategies and the imperative to preserve competitive market dynamics. As the aviation industry closely monitors these developments, the Korean Air-Asiana merger stands as a testament to the intricate process of navigating global antitrust approvals.