In a significant development, Korean Air announced on Wednesday that its planned merger with domestic counterpart Asiana Airlines has received approval from Japan’s antitrust regulator, the Japan Fair Trade Commission. The merger, valued at 1.8 trillion won ($1.34 billion), has faced a prolonged process of over three years, primarily due to concerns about potential monopolistic practices raised by foreign authorities.
The latest approval from Japan marks a crucial step forward for the high-profile merger, with 12 out of the required 14 authorities giving their nod to the deal. Notably, the European Union and the United States are yet to make their final decisions, and industry sources suggest that the European Commission’s decision could be expected in the coming weeks.
The approval process with Japanese authorities began in January 2021 when Korean Air provided explanatory data, followed by the submission of a draft report in August of the same year. Subsequent years witnessed discussions on corrective actions, addressing specific concerns raised by the Japan Fair Trade Commission (JFTC).
To secure approval, Korean Air reportedly had to make concessions related to specific popular routes between South Korea and Japan, where the combined market share of Korean Air, Asiana Airlines, and their budget carriers posed potential competition restrictions. The airline relinquished control over certain routes, allocating them to smaller low-cost carriers to address antitrust concerns.
Additionally, the JFTC expressed worries about the extended cargo business, leading to a resolution where Asiana Airlines decided to divest its cargo business.
Korean Air highlighted the significance of Japan’s approval, especially considering the country’s geographic proximity and the fierce competition to establish itself as a “Northeast Asia hub airport.” The airline expressed optimism that Japan’s approval would positively influence the decisions of the U.S. and EU authorities.
As the merger moves closer to realization, industry observers are closely watching for the outcomes of regulatory decisions from the European Union and the United States, which will play a pivotal role in shaping the future landscape of the aviation industry in the region.