EU’s Approval for Korean Air-Asiana Airlines Merger Keeping Korean Air on Its Toes

The European Union (EU)’s decision to approve a Korean Airlines-Asiana Airlines merger is fast approaching, drawing more attention from the airline industry. While many experts believe that approval will be given with some conditions, a formal outcome has not come out, keeping both airlines on edge.

According to sources in the airline industry on Feb. 12, EU competition authorities will announce the outcomes of their Korean Air-Asiana Airlines merger review on Feb. 14 (local time). In a notice on their website last month, they said their provisional deadline for a decision for approval for the merger was Feb. 14.

Industry insiders believe that the EU competition authorities are likely to make a conditional approval decision. As recently as the middle of 2023, many of them thought that the merger faced a rugged road ahead. The EU competition authorities have also voiced concerns about the merger, citing the possibility of restricting competition in the cargo sector and on some routes. In June 2023 it suspended the merger review, stating that the marriage of the two airlines may heat up competition in cargo and passenger transportation on European routes. Passenger routes that EU competition authorities were concerned about included those between Paris, Frankfurt, Rome and Barcelona and Incheon. Korean Air has since submitted various remedial measures to restart the review.

Things have changed since Asiana Airlines’ board of directors approved a plan to spin off its cargo business in November 2023. The two airlines sent remedial measures to the EU competition authorities, who then resumed the merger review. However, it cannot be ruled out that the final outcomes will be delayed. The EU competition authorities already delayed a merger approval decision once in July of 2023. At the time, the EU competition authorities said that essential information was missing and asked Korean Air to submit additional information.

If the EU approves the merger, the only party left will be the United States. However, many experts believe that the airlines’ significant market share on Korea-U.S. routes will make U.S. authorities demand corrections. According to sources in the airline industry, Korean Air, Asiana Airlines, and Delta Air Lines accounted for more than 80 percent of the Korea-U.S. air service market at Incheon International Airport in 2023. The Korea Fair Trade Commission considers Korean Air and Delta to be one carrier when determining whether competition is restricted, given that they jointly operate their Korea-U.S. routes after signing a joint venture agreement in 2018.

Japan, the United Kingdom, China, and other countries have previously demanded various remedial measures in the wake of the merger. Korean Air recently agreed to cede some slots on seven routes to Japan after the merger. The slots included those from Seoul to Osaka, Sapporo, Nagoya, and Fukuoka and from Busan to Osaka, Sapporo, and Fukuoka, including those of its low cost carrier, to new Japanese entrants if they want those routes.

Meanwhile, Korean Air has filed merger notifications with competition authorities in 14 countries — the EU, the United States, Turkey, Taiwan, Thailand, the Philippines, Malaysia, Vietnam, South Korea, Singapore, Australia, China, the U.K., and Japan — to absorb Asiana Airlines since Jan. 14, 2021. Twelve countries including Japan have either cleared the merger or closed the review, saying that the merger is not subject to review and notification.