Korean Air's headquarters building in Seoul / Korea Times file
By Kim Hyun-bin
The country's top antitrust watchdog is expected to announce its final decision to push forward with a conditional approval of Korean Air's acquisition of Asiana Airlines. The decision is expected to be reached during a plenary meeting scheduled for Wednesday.
Industry officials expect the Fair Trade Commission (FTC) to give the conditional approval, which will return some of the airport slots and transportation rights obtained by the two airlines, in order to alleviate monopoly concerns.
Last December, the FTC expressed its willingness to pursue a conditional approval of the deal.
However, other airlines are against the move, claiming that it will hinder their competitiveness globally, as it prevents or eliminates the opportunity for them to increase their market share.
The conditional approval also seeks to redistribute the flight rights, which are obtained through government-to-government negotiations, to domestic airlines.
Many believe that the approval will do more harm than good to Korea's aviation industry, as Korean Air and Asiana Airlines are the only two full-service carriers capable of conducting long-distance flights. Additionally, the return of slots and transportation rights may lead to a decrease in the competitiveness of the integrated airline, which may end up not achieving the expected power of the merged entities.
Some expect that the redistribution of the transportation rights to domestic airlines will open up opportunities for low-cost carriers (LCCs) to enter new routes, but there is concern that LCCs will not participate in long-distance transportation rights, which have difficulty generating profit, and will eventually pass the rights to overseas airlines. Such a situation could lead to a decrease in the overall competitiveness of Korea's aviation industry.
"The FTC says it will distribute the flight rights to local low-cost carriers, but these do not operate airplanes capable of long-distance flights and will have difficulty purchasing such aircraft, due to the devastating financial blow of the COVID-19 pandemic," an airline industry official said.
Korean Air submitted its opinion to the FTC last month, in which it reportedly requested the FTC to withdraw some of its suggestions for the conditional approval.
Following the final decision by the FTC, it is expected that overseas antitrust authorities will make their decisions on the deal. Currently, seven overseas authorities ― the EU, the U.S., China, Japan, the U.K., Singapore and Australia ― are reviewing the deal.
