By Will Lee
The Acquisition of Asiana Airlines Remains Uncertain
Korean Air could fall short of acquiring Asiana Airlines after clearing 11 hurdles in the past two years. The U.S. is considering filing a lawsuit to block the acquisition. According to Politico, the Department of Justice has been investigating the deal for two years. It came after the potential blockage from the EU. The plan could fall through without agreeing from the pair.
The merger concerns the U.S. that it could make less competition on passenger and cargo services between the U.S. and South Korea. Korean Air and Asiana Airlines provide service to San Francisco, Los Angeles, Seattle, New York and Honolulu.
In addition, the administration is also concerned that the Korean carriers could have a monopoly on cargo transportation. The decision could affect the stability of the supply chain, such as microchips.
“At the last meeting with the DOJ on May 12, Korean Air learned that the authority has yet to take a position nor has a confirmed timeline.” Korean Air said in a statement.
The U.S. government has blocked a few aviation mergers in recent years. Earlier, the U.S. filed suit to stop JetBlue from buying Spirit Airlines in March, and succeeding in opposing a partnership between JetBlue and American Airlines in 2021. But the Asiana acquisition could be the first time it breaks up the acquisition of foreign airlines.
In the meantime, the EU remains skeptical about the merger, worrying the acquisition could result in increasing airfares and decreasing the quality of passenger and air transport services in the future. The bloc said the merger could restrict competition in the provision of passenger transport services on four routes between South Korea and France, Germany, Italy and Spain, and cargo air transport services between the European Economic Area (EEA) and South Korea.
In 2021, Air Canada canceled the acquisition of Transat after opposition by the EU.
Korean Air is expected to provide remedy to ease its monopoly, giving up some slots to Europe. However, the EU hasn’t accepted the packages from Korean Air thus far. Both Korean carriers monopolized flight operations from Seoul to Barcelona and 75% market share in Rome before 2019.
The EU is expected to announce the final decision in August.
“Korean Air has made, and continues to make, every effort to obtain all necessary approvals by emphasizing that the majority of the customers on the affected routes are Korean nationals and that the airline fully complies with a robust and comprehensive set of remedies ordered by Korea’s Fair Trade Commission,” Korean Air said.
The Korean flag carrier needs to clear 14 hurdles before making the deal. After two years, Korean Air got 11 approvals from the competitors’ authorities, including Australia, Singapore, and the U.K. Japan also hasn’t given the green light beside the U.S. and EU at the moment.
