Korean Air-Asiana Merger 'Stalled'... "Overseas Approval Reviews Delayed"

Mandatory Reporting Countries US·EU·Japan·China Await
"Due to Fair Trade Commission Review Delay...Need for Customized Approach by Country"

[Asia Economy Reporter Yoo Hyun-seok] Concerns are rising as the approval reviews by overseas competition authorities are being delayed amid the sluggish progress of the merger process between Korean Air and Asiana Airlines. Although Cho Won-tae, chairman of Korean Air, expressed confidence that the merger approval could be finalized within this year, there are also voices of concern that the slow progress of approval reviews in various countries may not allow for unconditional optimism.

According to the aviation industry on the 15th, reviews related to the corporate merger of Korean Air and Asiana Airlines are underway in the United States, the European Union (EU), Japan, and China. These are mandatory reporting countries. Among the voluntary reporting countries, the review results from the United Kingdom and Australia are pending.

Previously, approval decisions were made starting with Turkey in February last year, followed by Taiwan, Thailand, Vietnam, Singapore, and Malaysia. In February this year, conditional approval related to the corporate merger was received from the Korea Fair Trade Commission (KFTC).

Originally, Korean Air planned to acquire Asiana Airlines' shares by June 30 last year, operate it independently as a subsidiary for two years, and then transform into a single integrated large full-service carrier (FSC) next year. However, the plan was disrupted due to delays in the KFTC's corporate merger review.

The industry believes that the KFTC's delayed decision likely affected major overseas review countries as well. In fact, no country has approved the merger after the KFTC's conditional approval. Even Singapore, which approved it on February 9, did so before the KFTC's decision.

An aviation industry official said, "Overseas countries may also use the KFTC's decision as a guideline," adding, "The delay in the KFTC's decision seems to be causing the process to take longer."

There is also analysis that each country is intentionally delaying the process to foster and protect their domestic aviation industries. Previously, in the United States, United Airlines, the country's second-largest airline, raised competition restriction issues with the U.S. Department of Justice. As a result, reports emerged that the Department of Justice upgraded the review level of the Korean Air and Asiana Airlines merger case from 'expedited' to 'in-depth.' Additionally, the EU, along with the UK and Australia, is demanding the entry of new airlines to resolve monopolistic concerns, which adds to the burden.

In particular, the market views China as the biggest variable compared to other countries. China could impose restrictions to protect its domestic aviation industry and may oppose the merger depending on the political situation with Korea.

Professor Hwang Yong-sik of Sejong University explained, "In the case of China or the EU, it is uncertain how sudden decisions might be made," and added, "A tailored approach is necessary for each."

An aviation industry official said, "If the political situation with China worsens, the damage will directly fall on the companies," and added, "Because of that, it is uncertain what will happen." Earlier, Chairman Cho stated at the International Air Transport Association (IATA) General Assembly media roundtable that "approval from the U.S. and EU is expected by the end of the year at the latest."

Meanwhile, Korean Air is operating dedicated expert groups by country, consisting of about 100 people across five teams, to obtain corporate merger approvals from competition authorities in each country. They have contracted with three global law firms to oversee the progress of overseas competition authority reviews, eight local law firms to closely respond to individual country reviews, three economic analysis firms to ensure objectivity and expertise, and two country-specific advisory firms for negotiation strategy development and political approaches.

This content was produced with the assistance of AI translation services.