Summary
- The South Korean airline merger of Asiana Airlines and Korean Air will likely receive antitrust approval from the European Union, supporting Korean Air’s acquisition plans.
- Asiana Airlines, which is heavily indebted and is part of Star Alliance, may sell off its cargo subsidiary and share direct routes with other carriers.
- Once the merger is completed, Asiana Airlines is expected to leave the Star Alliance and join SkyTeam, creating an opportunity for another airline to join the South Korean market.
The South Korean airline merger of Asiana Airlines and Korean Air is presumed to win the European Union antitrust approval, which will support Korean Air’s plan to purchase the Star Alliance carrier. This comes after the suggestion that its cargo subsidiary, Asiana Cargo, will be sold off, and four of its direct routes (Barcelona, Frankfurt, Paris, and Rome) will be shared with other carriers to take up the opportunity on the route.
Korean Air’s plans to merge with Asiana aren’t new and further highlight widespread consolidation across the airline industry, such as Lufthansa’s aspirations of acquiring ITA Airways.
Photo: Gabe Smith | Shutterstock
Asiana Airlines, which has been part of the Star Alliance since March 2003, is heavily indebted. During the COVID-19 pandemic, South Korea’s largest airline, Korean Air, offered to spend KR 1.8 trillion ($1.37 billion) to become the airline’s largest shareholder.
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T’way Air is waiting.
Since the suggestion of selling off the cargo division last November, South Korean low-cost-carrier T’way Air has made it known that it would like to acquire the cargo business after European officials noted it would prefer a Korean carrier to be the preferred buyer.
Since T’way’s inception in 2005, the carrier has grown to serve 46 destinations, with a fleet of over 30 aircraft from its hubs at Gimpo International (GMP) and Incheon International Airport (ICN). Its first long-haul service was launched in October 2022, when the carrier commenced a direct flight to the Australian state of New South Wales, serving Sydney Kingsford Smith International Airport (SYD).
Photo: T’way Air
As reported by Reuters, the European Commission declined to comment on its thorough approach to investigating airline mergers after past consolidations have reduced competition and raised airfares for travelers. Korean Air said it will provide complete remedies to address commission concerns.
While a decision from the European Union looks promising, the merger will still require approval from Japan and the United States. At the same time, the United Kingdom has already cleared the way for the deal to proceed, which saw its local carrier, Virgin Atlantic, commence services from London Heathrow to Seoul Incheon last year.
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The United States Department of Justice rejected the supposed merger last May, citing monopoly concerns. However, a review of this is likely now the decision for the cargo division to be sold off.
Malaysia, Turkey, and China have all already approved the merger.
Moving from Star Alliance to SkyTeam
Once the merger is completed, Asiana Airlines is expected to leave the Star Alliance and join SkyTeam, leaving a gap in the South Korean market for another airline to join the mix. All Nippon Airways (Tokyo) or Air China (Beijing) would be the closest Star Alliance members post-withdrawal.
Photo: Vincenzo Pace | Simple Flying
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Asiana Airlines
- IATA/ICAO Code:
- OZ/AAR
- Airline Type:
- Full Service Carrier
- Hub(s):
- Incheon International Airport
- Year Founded:
- 1988
- Alliance:
- Star Alliance
- CEO:
- Han Chang-soo
- Country:
- South Korea
- Region:
- Asia
