The aviation industry is abuzz with the latest news on the proposed merger between Korean Air and Asiana Airlines. This merger, which has been in the works for several years, is now on the brink of global approval, with only the United States Department of Justice (DOJ) remaining as the final hurdle.
By Aditya M
European Commission Approval
On November 28, 2024, the European Commission (EC) gave its final approval for the merger. This approval came after Korean Air fulfilled all the conditions set by the EC in February 2024. The two key conditions included ensuring stable operations of a remedy carrier on four overlapping European routes (Barcelona, Frankfurt, Paris, and Rome) and the divestiture of Asiana's freighter business. Korean Air designated South Korean low-cost carrier T'way Air as the remedy carrier for these routes and committed to providing operational support, including aircraft, flight crew, and maintenance services. Asiana's cargo business was sold to Air Incheon.
Global Approvals and Remaining Hurdles
With the EC's approval, Korean Air has now secured 13 out of 14 necessary approvals from competition authorities worldwide. The only remaining approval needed is from the U.S. DOJ. Korean Air has submitted the EC's final approval to the DOJ and expects to receive the final nod by the end of December 2024. The U.S. DOJ has been reviewing the merger for potential antitrust issues, but industry watchers believe that the deal will ultimately be approved.
Implications of the Merger
Once approved, the merger will create the world's 10th-largest airline by fleet size. Korean Air plans to keep Asiana as a subsidiary for two years before fully integrating the two airlines. During this intermediary period, the two airlines will exchange employees and resources to ensure a smooth transition. The merger is expected to enhance Korean Air's market position and provide more comprehensive services to passengers.
Industry Reactions
The aviation industry has had mixed reactions to the merger. While some see it as a positive step towards consolidation and improved efficiency, others are concerned about potential monopolistic practices and reduced competition. Korean Air has taken proactive measures to address these concerns, such as expanding its code-sharing partnership with Air Premia for North American routes.
Conclusion
The Korean Air and Asiana Airlines merger is a significant development in the aviation industry. With global approvals nearly secured, the final approval from the U.S. DOJ will be the last piece of the puzzle. If approved, the merger will reshape the landscape of the aviation industry and set a precedent for future mergers and acquisitions.
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