The Japan Fair Trade Commission (JFTC) has green-lit a merger between Korea’s two largest airlines, Korean Air (KAL) and Asiana Airlines, bringing the massive deal a step closer.
With the proposed merger given the go-ahead by 12 competition authorities, only approvals from the European Union (EU) and the United States are still to come.
Korean Air submitted its intentions to Japan three years ago. However, JFTC expressed concerns about a merger of KAL, Asiana Airlines and its subsidiaries (Jin Air, Air Busan and Air Seoul) limiting competition on routes between Korea and Japan.
Eventually, JFTC concluded that five of the 12 overlapping routes would not be subject to review, while KAL decided to give up several slots on the other routes if they were needed. These routes included Seoul to Osaka, Sapporo, Nagoya and Fukuoka, as well as Busan to Osaka, Sapporo and Fukuoka.
According to the Korea Times, KAL signed a deal to buy a controlling stake in Asiana to create the world’s tenth-biggest airline by fleet in November 2020.
KAL has since filed merger reports with 14 competition regulators, with Australian authorities green-lighting the proposal in September 2022.
The EU is expected to approve the merger provisionally soon, but its biggest hurdle may be getting approval from the US, which could have concerns about the merger’s impact on airline competition, Korean media reported.
According to BusinessKorea however, a few things are working in KAL’s favour, such as an airline liberalisation agreement the carrier has with the Korean government, which allows it to operate services to the US without traffic rights.
KAL said in a statement that it expects Japan’s approval to “positively influence the decisions of the US and EU authorities”, the Korea Herald reported.
“Korean Air is committed to constructive dialogue with the remaining authorities – the EU and U.S. – to obtain approvals at the earliest opportunity,” the Seoul-based airline said in a statement on its website.
In December 2023, Asiana began direct flights between Melbourne and Seoul Incheon Airport for the first time.
