S Korea gives conditional nod to Korean Air's Asiana Airlines purchase
SEOUL : South Korea's antitrust agency said on Tuesday it
conditionally approves flag carrier Korean Air Lines' planned acquisition of
rival Asiana Airlines.
In a deal announced in late 2020, Korean Air planned to
spend 1.8 trillion won ($1.6 billion) to become the top shareholder of indebted
Asiana in one of the first major consolidations in aviation since the industry
was hit by COVID-19.
"This merger is a change from the system of two major airlines that dominated the South Korean air transport market for more than 30 years, and is the first-ever merger of full service carriers in South Korea," Korea Fair Trade Commission Chairperson Joh Sung-wook told a briefing.
Out of 65 international passenger routes and 22 domestic
routes in which the airlines overlap, the agency ordered Korean Air to hand
over slots and traffic rights for 26 international and 14 domestic routes in
the next 10 years if a newly competing airline requests them, as a condition of
the approval.
Moreover, until competing airlines seek slots and traffic
rights, Korean Air is ordered to limit fare increases, keep from reducing
supply and make sure that service quality does not deteriorate until new market
entry, Joh said.
The routes in question were where the airlines' combined
market share were 60per cent or more, there were few or no competitors, and the
KFTC saw a high chance of a fare hike, the KFTC said.
They included routes such as Seoul-New York, Seoul-Los
Angeles and Seoul-Seattle, in which the two merging airlines and Korean Air's
partner Delta Air Lines took up 100per cent of the market share.
"Korean Air respects the decision of the KFTC, and will
continue its efforts to receive approvals from the remaining regulatory
bodies," Korean Air told Reuters on Tuesday.
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