Korean Air and Asiana are collaborating to run as one aircraft, when was first announced in November 2020. In order to keep customers rights to important markets, the two dominant airlines in the Republic of Korea must obtain the approval of a foreign authority.
In February 2022, Korea granted the request for a consolidation.
Countries approved of this consolidation:
Turkey in February 2021
Taiwan in the month of May 2021
In May 2021, Thailand
In May 2021, the Philippines
In September 2021, Malaysia
November 2021 in Vietnam
February 2022 in Singapore
In September 2022, Australia
In December 2002, China
March 2023 in the UK
January 2024 in Japan
Union of Europe in February 2024
The United States of America has not yet given its approval.
Now, A Giant Step Closer to Merger was approved.
According to the EU Merger Regulation, the European Commission has today approved Korean Air Lines Co., Ltd.’s proposed acquisition of Asiana Airlines Inc. ( ‘Asiana’ ). The acceptance is subject to complete adherence to the solutions provided by Korean Air.
The choice made today comes after a thorough analysis of the suggested acquisition. The largest airport in South Korea that provides global passenger and goods service is Korean Air. Similar services are offered by Asiana, the second-largest aircraft in South Korea. The European Economic Area ( ‘EEA’ ) is where both airlines have a sizable presence.
They run a network of private roads, short-haul roads in Asia, and long-distance routes between South Korea and the rest of the world.
Initial problems of the EU Commission
According to the initial investigation, the businesses are significant and near rivals in the delivery of passenger and cargo atmosphere transportation services between the EEA and South Korea. In specific, the Commission discovered that:
The deal might lessen contest for customer transportation companies on four roads between South Korea and the EEA. Korean Air and Asiana face off in those roads, and on two of them, they are the just two businesses providing strong service. It’s doubtful that other airlines will put enough competitive pressure on the integrated object.
The agreement might end any possible rivalry between the EEA and South Korea in customer transportation services.
The deal might lessen contest for goods transportation service between Europe and South Korea. When it comes to transporting goods between the EEA and South Korea, Korean Air and Asiana face off. Another rivals may not be able to put enough competitive pressure on the integrated entity because they face governmental and other obstacles to increase their services.
It is improbable that Asiana and Korean Air may prevent competing or become noticeably less competitive excluded the deal, despite the severe effects of the coronavirus pandemic in the passenger air transport sector.
On January 13, 2023, the Commission received notification of the purchase. Asiana and Korean Air made the decision not to make agreements. Up until July 5, 2023, the Commission had 90 operating days to make a choice.
The start of a thorough analysis does not determine the results of the investigation.
Businesses and goods
A full-service ship with domestic and international functions in customer and cargo air travel, Korean Air has its headquarters in South Korea. It runs a hub-and-spoke system with its main gateway at Seoul’s Incheon aircraft. The SkyTeam empire includes Korean Air as a member.
Asiana, a full-service aircraft with domestic and international functions in passenger and goods air travel, has its headquarters in South Korea. Asiana belongs to the Alliance of Stars.
Control and technique for mergers
The Commission is required to evaluate mergers and acquisitions involving businesses with turnovers greater than a certain threshold ( see Article 1 of the Merger Regulation ) and to avoid concentrations that would seriously obstruct the EEA’s or any significant portion of its effective competition.
The vast majority of mergers that are notified are approved following a regular review and do not cause any issues with competitors.
The Commission’s inquiry
The Commission gathered a lot of data during its in-depth research and got input from marketplace participants and other partners.
The Commission was concerned that the transaction, when primarily announced, would hurt competitors in the markets for the following reasons after its market investigation:
solutions for air cargo transportation between South Korea and Europe, as well as
providers for customer air travel between Seoul and specific Western cities like Barcelona, Paris, Frankfurt, and Rome.
According to the Commission, Korean Air and Asiana face off when transporting goods and people between the EEA and South Korea. They would have eliminated a crucial customer option by being by far the biggest ship along these roads.
Asiana Workers Will Be Retained by Korean Air Under Certain Circumstances
It is improbable that another rivals would have put enough competitive pressure on the integrated company given the regulatory and other obstacles they face in expanding their services. For passengers and cargo buyers, this would have likely resulted in higher rates or lower value.
The suggested fixes by the Union
Korean Air provided the following solutions to address the Commission’s concerns about contest:
Cargo commitments: Asiana’s international goods freighter business will be sold by Korean Air. Freighter plane, slots, customers rights, flight staff, and other employees are all included in the divestment, along with customer cargo contracts. Only after the Commission has approved a suitable purchaser for the goods withdrawal is Korean Air carry out the acquisition of Asiana. The buyer had, among other things, be able to run the stripped business successfully and have the incentives to compete successfully with the integrated company.
Commitments to passengers: Korean Air will make the necessary resources available to rival flight T ‘ Way so that it can begin flying on the four collide routes. Slot machines, customers rights, and access to the necessary aircraft are among the assets. T’Way is a South Korean aircraft that has its main office in Seoul and runs its extensive network of roads throughout East Asia and above. Korean Air has stated that it wo n’t finish the merger until T ‘ Way has begun using the four overlap routes.
The opposition concerns raised by the European Commission are completely addressed by these commitments.
The Commission came to the conclusion that the agreements maintain successful competitors in cargo and passenger transport between South Korea and the EEA after gathering the opinions of consumers and companies during a market evaluation of the proposals.
As a result, the Commission came to the conclusion that the agreements ‘ modification of the transaction would no longer cause worries about competition. The choice is subject to complete adherence to these agreements.
An impartial owner may oversee their implementation while the Commission is in charge.
Businesses and goods
A full-service ship with domestic and international functions in customer and cargo air travel, Korean Air has its headquarters in South Korea. With its main gateway at Seoul’s Incheon airports, it runs a hub-and-spoke system. A part of the SkyTeam empire is Korean Air.
Asiana is a full-service airline with domestic and international passenger and cargo heat transportation operations with its headquarters in South Korea. Its main hub is located at Seoul’s Incheon aircraft. Asiana belongs to the Star Alliance. Asiana Merger and Korean Air are One Step Closer, according to SOURCE: eTurboNews |ETN
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