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The creation of a new Asian super airline goes one step further. On Wednesday, Japanese regulators approved Korean Air’s proposed merger with local rival Asiana Airlines.
Given the scale and potential impact of the deal, carriers that cut will have to obtain regulatory approval from global authorities. The green light from the Japan Fair Trade Commission (JFTC) is the first new approval of the merger in nearly a year.
Japan is the 12th regulator out of 14 to approve the deal. However, the last two juries of the festival will be the most difficult to satisfy. The United States and the European Union have raised considerations and examined more closely the implications of any partnership.
In November 2020, at the height of the Covid-19 crisis, Korean Air announced that it was seeking to gain a majority stake in Asiana. The start of the formal procedure with global regulators began in January 2021, when Korean Air first submitted its plan to the JFTC. A follow-up document with further economic and market analysis submitted in August 2021.
For the past three years, Korean Air has had to deal with the considerations raised through the JFTC, while satisfying the other thirteen stakeholders.
As a condition of its approval, officials in Tokyo asked for pro-competitive changes to be made on routes between South Korea and Japan. The focus is on services where the combined market share of the two carriers and their respective subsidiaries – Jin Air, Air Busan, and Air Seoul – would limit competition.
It was confirmed on Wednesday that Korean Air would forfeit existing airport slots on seven affected routes, and make these available to rival operators.
Korean Air says it is “committed to constructive dialogue” with E.U. and U.S. regulators to “obtain approvals at the earliest opportunity.” The Europeans are considered to be closer to approving the deal than their counterparts in Washington D.C.
Turkey was the first to approve the agreement in February 2021, followed by Taiwan, Thailand, the Philippines, Malaysia and Vietnam that same year. The acquiescence of South Korea, Singapore, Australia and China took a stand in 2022, while the UK said yes last year.
If finalized, the combined venture would create the world’s 10th largest airline by fleet size. The Korean Air brand, the most dominant, would remain and Asiana’s corporate identity would gradually disappear as the merger concluded. It is unclear what will lead to the commercial positioning of the subsidiary airlines.
In addition to well-documented concerns about festivals, the deal would also lead to big adjustments for passengers. Korean Air is a founding member of SkyTeam, while Asiana is owned by rival Star Alliance. The merger would see Asiana’s assets absorbed through Korean Air and the carrier would relinquish its current membership.
Both airlines and their related sub-brands already control one of the world’s busiest air transport markets. New data released this week shows that Seoul ranks first on a list of the 10 busiest roads in the world.
This progression follows other large-scale M&A activities in the global airline industry. In the U. S. earlier this month, a ruling blocked a partnership between JetBlue and Spirit, while the partnership between Alaska Airlines and Hawaiian is still in place. air.
In Europe, national carriers TAP Air Portugal, ITA Airways and SAS Norwegian Airlines have been the subject of acquisition negotiations.
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