Korean Air-Asiana Merger Faces Yellow Light in Europe... "Will They Surrender Slots?"

Korean Air and Asiana Airlines, which are undergoing a corporate merger review, have encountered turbulence. The European Union (EU), currently conducting the review, has expressed negative opinions, raising concerns about potential competition restrictions in the event of a merger. Although the final decision has not been made, since corrective measures will be required, Korean Air and Asiana are expected to concede slots (the number of allowed takeoffs and landings per hour) on the routes pointed out by the EU.

On the 17th (local time), the European Commission sent Korean Air a Statement of Objections (SO) containing the preliminary investigation results. The Commission explained that the acquisition of Asiana Airlines by Korean Air could limit competition in the passenger and cargo transport service markets between the European Economic Area (EEA) and Korea.

The Commission stated, "Korean Air and Asiana Airlines compete in passenger and cargo transport between the EEA and Korea," adding, "Upon merger, they would become the largest passenger and cargo airline on these routes, resulting in the disappearance of important alternative carriers for consumers." It further emphasized, "If the acquisition and merger are completed, prices for passengers and air transport services may rise, or quality may deteriorate."

The routes where the Commission expressed competition restriction concerns are Germany, France, Spain, and Italy. For cargo, the concern covers 'Korea~all of Europe.' These are the same routes pointed out by the Korea Fair Trade Commission (KFTC) when it conditionally approved the Korean Air and Asiana Airlines merger in 2022. The KFTC noted that, in addition to the routes identified by the Commission in Europe, there are competition restriction concerns extending to T?rkiye and Rome.

Korean Air has stated its intention to address the EU Commission's concerns and pass the review. Korean Air explained, "The issuance of the SO by the EU competition authority is a routine procedure conducted under the Phase II merger review regulations," adding, "The EU intends to issue the SO following the established procedures but will also continue consultations with Korean Air regarding corrective measures." It emphasized, "Korean Air plans to do its best to obtain final approval by submitting responses and actively discussing corrective measures to resolve the concerns raised by the competition authorities included in the SO."

Due to this notification, Korean Air and Asiana Airlines are expected to have no choice but to concede slots on European routes. In March, as a condition for the UK competition authority's approval of the merger, Korean Air and Asiana Airlines agreed to provide slots they held to the UK airline Virgin Atlantic up to seven times a week if needed.

However, if slots are provided this time, it is highly likely that the recipient will be a domestic airline rather than a foreign carrier. An industry insider said, "I understand that T'way Air and Air Premia are interested in European routes," adding, "Since European airlines are already operating flights to Korea, it is highly likely that the slots will go to domestic airlines."

Korean Air began pursuing the acquisition and merger of Asiana Airlines in November 2020 and has filed merger notifications in a total of 14 countries, including Korea. Approvals from the EU, the United States, and Japan remain pending. The EU's final approval is expected in August.

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