Japan competition watchdog clears Korean’s Asiana acquisition

Japan has cleared the merger of Korean Air with compatriot Asiana Airlines, but on the condition that the Korean carrier cede some slots to other carriers.

In considering the merger, the Japan Fair Trade Commission (JFTC) looked at 12 overlapping roues between South Korea and Japan, says Korean.

It determined that five routes were not subject to review. Of the remaining seven, Korean will cede “a limited number of slots” to other carriers if they decide to take them up. The seven routes include four from Seoul – Osaka, Sapporo, Nagoya, and Fukuoka – and three from Busan – Osaka, Sapporo, and Fukuoka.

The approval process in Japan started three years ago with Korean’s submission, followed by a market and economic report in August 2021.

“The JFTC requested for Korean Air to submit remedies on select routes between Korea and Japan where the combined market share of Korean Air, Asiana Airlines and its respective subsidiaries (Jin Air, Air Busan and Air Seoul) would limit competition,” says the carrier.

The JFTC also expressed initial concern about the merger of the Korean and Asiana cargo businesses, but was satisfied with Korean’s plan to divest the Asiana cargo unit after the merger.

The JFTC’s blessing means just two out of 14 jurisdictions have yet to clear the merger, the European Union and the USA.

In May 2023, the European Commission had expressed concerns that the deal will reduce competition on on passenger routes between South Korea and France, Germany, Italy, and Spain. It also expressed concern about the carriers’ combined cargo operations, but in October 2023 the Asiana board cleared the sale of the cargo unit. Reports suggest that the Brussels is poised to issue a favorable ruling. 

Reports from the USA have suggested that the US government is also concerned with deal’s potential impact on competition. 

In a message to employees on New Years Day, Korean Air chief executive Walter Cho expressed confidence that that the merger, originally announced in November 2020, will be finalised in 2024.

“Korean Air will be poised to stand shoulder to shoulder with global leading airlines,” said Cho.

“The merger will optimise our network and allow us to operate to new destinations, so that we may offer customers more choices.”