Wednesday, February 28, 2024

Japan Fair Trade Commission approves Korean Air’s merger with Asiana Airlines

The Japan Fair Trade Commission (JFTC) approved Korean Air’s business combination with Asiana Airlines, marking a significant milestone in the two airlines’ merger process. To date, Korean Air has received approvals from 12 of 14 competition authorities.

The approval process commenced in January 2021, when Korean Air submitted its intent to the JFTC. Subsequently, a comprehensive initial report containing market and economic analysis was submitted in August 2021. Korean Air has proactively engaged in dialogues with all concerned parties to address various concerns raised by the JFTC.

The JFTC requested for Korean Air to submit remedies on select routes between Korea and Japan where the combined market share of Korean Air, Asiana Airlines and its respective subsidiaries (Jin Air, Air Busan and Air Seoul) would limit competition.

After discussion, the JFTC concluded that five of the 12 overlapping routes on the network were not subject to competition review. In addressing the remaining concerns, the airline has decided to cede a limited number of slots on seven routes, should “remedy takers” decide to operate on them. These routes include Seoul-Osaka, Sapporo, Nagoya, Fukuoka, as well as Busan-Osaka, Sapporo, and Fukuoka.

The JFTC also raised competition concerns about the Korea-Japan cargo network. However, with the decision to divest Asiana’s cargo business, the JFTC limited its request for the airline to enter into a cargo block space agreement (BSA) on select routes from Japan to Korea. The divestiture of Asiana’s cargo business is subject to the approval of all remaining competition authorities and will occur after Asiana Airlines is incorporated as a subsidiary of Korean Air.

Since January 2021, Korean Air has filed business combination reports with a total of 14 competition authorities. A total of 12 authorities including Japan, have either approved the combination or concluded the review on the grounds that the business combination was not subject to review or report. Korean Air is committed to constructive dialogue with the remaining authorities – the EU and U.S. – to obtain approvals at the earliest opportunity.

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