Korean Air has achieved a significant milestone in its pursuit of merging with Asiana Airlines, securing final approval from the European Commission (EC). This positive development signals a major step forward in the ambitious consolidation plan, but the path to completion isn’t entirely clear yet. The merger’s fate now hinges on the decision of the U.S. Department of Justice (DOJ), which remains the last regulatory obstacle before the deal can be finalized by the end of 2024.
The EC’s approval, granted after careful consideration and the fulfillment of stipulated conditions by Korean Air, marks a pivotal moment. Initially, the Commission voiced concerns about potential anti-competitive effects within the European market. To address these, Korean Air strategically divested certain routes and launched new services. This involved transferring four key European routes—previously operated by Asiana Airlines—to T’Way Air, a Korean low-cost carrier. This carefully crafted move ensures the maintenance of competition on crucial routes connecting Seoul Incheon International Airport (ICN) to major European hubs such as Barcelona (BCN), Frankfurt (FRA), Paris (CDG), and Rome (FCO).
T’Way Air’s strategic expansion is remarkable. Starting with flights to Rome in August 2024 and quickly adding Barcelona and Paris in September, followed by Frankfurt in October, they have demonstrated an impressive capacity for rapid growth. To further support this expansion, T’Way Air recently signed an agreement with Avolon, an aircraft leasing company, to acquire five Airbus A330-900s. Three of these wide-body aircraft are scheduled for delivery by 2026, underscoring their commitment to serving the growing demand between South Korea and Europe. Crucially, Korean Air is providing significant support to T’Way Air, offering vital resources such as aircraft, crew, and maintenance to aid their successful integration into the competitive European market. This strategic partnership is a key element in alleviating the EC’s initial concerns regarding reduced competition.
Further solidifying the merger’s compliance with regulatory demands, Air Incheon, a Seoul-based cargo carrier, will absorb Asiana Airlines’ freight operations. This transfer encompasses Asiana Cargo’s entire fleet (12 Boeing 747-400 freighters and one Boeing 767 freighter), slots, traffic rights, crew, customer contracts, and other essential assets. This proactive measure ensures the continued and competitive provision of cargo services. This divestment satisfied a key condition imposed by the European Commission, maintaining the balance of competition in the cargo market.
However, the biggest hurdle remains the DOJ’s review. The DOJ has expressed concern that the merger could stifle competition on flights between South Korea and the United States, potentially leading to higher prices and reduced choices for consumers. The agency’s worries center on the already substantial market share held by Korean Air and Asiana Airlines on major routes connecting Seoul-Incheon to key U.S. cities like New York, Los Angeles, and San Francisco. These concerns were amplified earlier in 2023, fueled by the significant combined capacity (over 60% of the total market share, exceeding 75% when including Delta Air Lines’ contribution) of the two carriers. Despite these challenges, Korean Air has submitted the EC’s approval to the DOJ, expressing optimism that the merger will ultimately benefit both consumers and the airline industry through increased global competitiveness.
The outcome of the DOJ’s review will have significant ramifications for the aviation industry, shaping future mergers and influencing the dynamics of international air travel. The world watches with bated breath, as this merger’s success could redefine the landscape of global air travel.
