Korean Air defends Asiana merger against monopoly concerns
Korean Air president Woo Ki-hong has disputed concerns KAL’s planned merger with Asiana Airlines will lead to a local air market monopoly.
A combined business would have 40% of share at Seoul Incheon International Airport.
Under Korean law an acquisition would not normally be approved if market share was 50% or more.
However there are still concerns as the two airlines along with their respective low cost brands held a 66% market share nationally last year.
"Jin Air, Air Busan and Air Seoul are run as separate companies competing with Korean Air and Asiana Airlines and, as such, their market shares should not be included in the calculation," he said.
He said when the merger is complete it will result in two distinct companies – one full-service and one low-cost carrier.
The Korea Fair Trade Commission hasn’t yet decided whether to include the low-cost carriers’ market shares in the calculation to determine possible competition concerns.
Korean Air said it will start due diligence on Asiana Airlines which will take several weeks.
At the same time it is working on an integration plan for the airlines.
"The company will look into Asiana’s cost structure and contracts as it is scheduled to come up with the post-merger integration plan by 17 March," Woo Ki-hong said.
He is confident authorities in the US, the European Union, China and Japan will approve the merger.
"There seems to be no problems in obtaining approval from overseas for the merger of the two airlines, given bigger merger deals went smoothly in the past."
A deal would create the world’s 10th-largest airline by fleet size.
Written by Ray Montgomery, Asia Editor
TravelMole Editorial Team
Editor for TravelMole North America and Asia pacific regions. Ray is a highly experienced (15+ years) skilled journalist and editor predominantly in travel, hospitality and lifestyle working with a huge number of major market-leading brands. He has also cover in-depth news, interviews and features in general business, finance, tech and geopolitical issues for a select few major news outlets and publishers.
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