Delayed Overseas Approval Review... Korean Air-Asiana Merger 'Stalled' (Comprehensive)

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 integration process between Korean Air and Asiana Airlines is delayed. In particular, the delayed approval reviews by overseas competition authorities are pointed out as the biggest issue. Although Cho Won-tae, Chairman of Korean Air, expressed confidence that the merger approval could be completed within this year, there are opinions 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 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 of 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 influenced major overseas review countries as well. In fact, no country has approved the merger after the KFTC’s conditional approval. Singapore, which approved on February 9, did so before the KFTC’s decision.

The aviation industry is closely monitoring the KFTC’s decision. An industry official said, "Overseas countries may use the KFTC’s decision as a guideline," adding, "The delay in the KFTC’s decision seems to be causing additional time consumption."

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

In particular, the market views China as the biggest variable compared to other countries. China may impose restrictions to protect its domestic aviation industry and could 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 affect the companies," and "Because of that, it is uncertain what will happen." Earlier, Chairman Cho stated at the International Air Transport Association (IATA) General Assembly media roundtable, "We expect to receive approvals from the U.S. and EU by the end of the year at the latest."

Meanwhile, Korean Air is operating dedicated expert groups for each country, consisting of about 100 people across five teams, to obtain corporate merger approvals from competition authorities worldwide. 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.