It has been confirmed that the US Department of Justice ( DOJ ), which is in the process of reviewing Korean Air’s merger and acquisition of Asiana Airlines, notified Korean Air that “it is difficult to approve a merger without an Asiana-level competitor.” DOJ evaluated that the merger between Korean Air and Asiana Airlines would create a ‘monopoly’ that would prevent market competition due to their overwhelming market dominance on routes to the Americas. Following the collapse of the merger between Hyundai Heavy Industries and Daewoo Shipbuilding & Marine Engineering, the ‘Big Deal’ for restructuring the aviation industry promoted by the Korea Development Bank was also driven to the brink of collapse.
○Conclusion of ‘exclusive’ route to the AmericasAccording to the airline industry and investment banks on the 22nd, the US DOJ , which is reviewing Korean Air’s메이저사이트 M&A with Asiana Airlines , recently notified Korean Air that “it is difficult to approve a merger if there is no Asiana-class competitor.” In response, Korean Air proposed “to solve the monopoly problem by developing Air Premia, a low-cost carrier ( LCC ),” but the DOJ rejected it. If Korean Air fails to present an alternative to resolve the monopoly problem by early August, the DOJ is reportedly considering a lawsuit to disallow the merger. It is evaluated that the possibility of a big deal between the 1st and 2nd largest airlines in Korea actually returning to failure has increased. It is evaluated that the US DOJ ‘s action is stronger than the European Union’s ( EU ) action, which demanded immediate slots for exclusive routes (the time slots allocated for takeoff and landing at specific airports) and return of traffic rights. If even one of the mandatory reporting countries, the US and the EU , disapproves of the merger, the merger between the two companies will be canceled. Of the 13 routes to the Americas operated by Korean Air and Asiana, 5 routes are subject to monopoly concerns (San Francisco, Honolulu, New York, LA) .
○ DOJ , “Insufficient Air Premia”According to competition authorities, United Airlines, the second-largest airline in the United States, has consistently expressed negative opinions to the DOJ about the Korean Air-Asiana merger. This is because Korean Air and Delta Air Lines have a high-level alliance, such as sharing ticketing as members of the ‘SkyTeam’. It was also concerned that Asiana would fall out of the ‘Star Alliance’ with United Airlines due to the merger.
Korean Air is said to have proposed Air Premia, a domestic LCC , as an alternative to the DOJ ‘s request to resolve competition restrictions. It was based on the fact that Air Premia is seeking to expand its business by increasing flights to the Americas recently. But the DOJ didn’t accept it. This is because it was judged that Air Premia, a new LCC , could not compete with the dinosaur airlines that combined Korean Air and Asiana. As the nation-first policy spreads, cases of failed M&As in key industries by foreign competition authorities are increasing one after another. In 2021, Air Canada, Canada’s No. 1 airline, promoted the acquisition of Air Transat, but failed to cross the threshold of the EU competition authorities. US DOJ
There are also voices saying that if the merger between Korean Air and Asiana Airlines is ultimately canceled due to this measure, the Korean government will not be free from its responsibility. An official from the aviation industry pointed out, “It is regrettable that we were not able to convince the DOJ even in a situation where there is an evaluation that Korea-US relations have been upgraded to the next level with President Yoon Seok-yeol’s state visit to the United States.” Korean Air said on the same day, “We are doing our best to complete the merger.”