Update on the Asiana Airlines and Korean Air merger planned for 2024
Asiana Airlines and Korean Air have already said they will fully unite later than previously planned, in 2024. Now the Korean Fair Trade Commission’s review of of the merger has officially been extended. An ongoing review of Korean Air’s proposed merger with Asiana Airlines by competition authorities in South Korea and eight other key jurisdictions has forced Korean Air’s parent Hanjin Group to defer the planned closing date from October 30 to December 31, 2021.
Korea’s fair trade chief, Joh Sung-wook, has cast doubt on the planned merger between Korean Air (KE, Seoul Incheon) and Asiana Airlines (OZ, Seoul Incheon), suggesting that there are serious monopoly concerns and that a solution to these must be found or the deal may fail, local media reported.
The History of Asiana Airlines
Over the last three decades or so, Asiana Airlines has established itself as a key player in South Korean commercial aviation. The carrier operates a diverse mix of Airbus and Boeing narrowbodies and widebodies, alongside a dedicated cargo fleet. Now a member of the Star Alliance, it serves more than 80 destinations in nearly 30 countries.
Asiana Airlines began life as Seoul Air International, with its foundation taking place in February 1988. It commenced operations in December that year, initially serving domestic routes with the Boeing 737. Widebodies and international services became part of Asiana’s operations in the early 1990s, and it hasn’t looked back, joining the Star Alliance in 2003.
Breaking the monopoly
At the time of Asiana’s initial establishment as Seoul Air International in 1988, South Korea was a one-airline country. Indeed flag carrier Korean Air had a total monopoly on air traffic in the nation. As such, under pressure from conglomerates known as chaebols who saw a chance for competition, the new airline came to life with backing from the Kumho Group.
It was not necessarily a bad thing that Asiana’s initial services were domestic ones. After all, South Korea is home to the world’s busiest air route in the form of Seoul-Jeju. As it happened, Asiana’s first Boeing 737-operated flights served Busan instead. It only added Jeju as a destination the following year, alongside the likes of Daegu and Gwanju.
International growth
Operating out of hubs at both Seoul Gimpo and Seoul Incheon, the 1990s were a fruitful decade for Asiana in terms of growth. It began the decade in style, opening its first scheduled international routes to the Japanese cities of Fukuko, Nagoya, Sendai, and Tokyo. Interestingly enough, it had already begun flying to Sendai in 1989 on a charter basis.
By December 1991, the arrival of long-haul widebodies like the Boeing 747-400 had enabled transpacific services to Los Angeles. The mid-1990s saw Honolulu added to Asiana’s list of intercontinental destinations alongside the European pair of Brussels and Vienna.
As well as the 747, Boeing’s 767-300 twinjet was also a key 1990s widebody for Asiana. Moving into the 21st century, the Airbus A330 and Boeing 777 also began to play a role at the airline. It was around this time that, in 2003, Asiana became a Star Alliance member.
Joining forces
While Asiana initially came into existence to challenge Korean Air’s monopoly, it is now set to merge with the national carrier. This will provide much-needed stability after an uncertain period that began in April 2019 when the Kumho Group announced that it would be selling the airline to solve its own financial crisis. It had looked as if Hyundai would acquire the carrier, but this deal ended up being canceled in September 2020.
However, two months later, the Korean government announced that none other than Korean Air would be acquiring Asiana.
The airline is currently going through the business combination review process, and the acquisition will be finalized upon receiving approval from all relevant competition authorities. Integration is set to be completed about two years after the acquisition. simpleflying.com