S. Korea trade officials likely to OK Asiana-Korean Air merger with changes to slots, traffic rights

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KE Inspection Drone swarms 2
(PHOTO: Korean Air)

FlightSafeyThe Korea Fair Trade Commission (KFTC) announced on 29 December that it may approve Korean Air’s acquisition of Asiana Airlines on condition that some slots are returned and traffic rights are redistributed so that these can be given to domestic low-cost carriers. Experts point out that the limited traffic rights will lead to a decline in market share, according to media reports from South Korea.

The KFTC is planning to examine the method next month. Until recently, the KFTC analysed approximately 250 routes of the two airlines and their three subsidiaries (Jin Air, Air Busan and Air Seoul) to find whether their business combination will limit market competition.

According to the KFTC, competition is likely to be limited in the routes where their combined market share exceeds 50 percent and the share is 100 percent in 10, including Incheon-LA, Incheon-New York, Incheon-Zhangjiajie, and Busan-Nagoya. The KFTC proposed the slot return regarding the routes.

In addition, the KFTC suggested the traffic right redistribution when it comes to routes not subject to the Treaty on Open Skies, which include multiple routes between South Korea and Europe, China, Southeast Asia and Japan.

The FTC is scheduled to make a decision in late January or early February following a meeting of its commissioners. Korean Air Lines is still waiting for approvals from seven other jurisdictions: the United States, China, Japan, European Union, Britain, Australia, Singapore. It has received the green light from four countries: Turkey, Vietnam, Taiwan, Malaysia. Wednesday’s report was unprecedented, as the regulator does not normally give any indication of its thinking on combinations until it has made its final decision. The disclosure was to prevent speculation about the merger of the two carriers.

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