Korea’s airline industry is expecting travel demand to boom again after more than a two-year slump due to the COVID-19 pandemic as the government takes steps to initiate a phased return to normal starting from the second week of next month.
However, the process of Korean Air acquiring rival Asiana Airlines, which began in November of last year, is taking longer than expected.
The Korea Fair Trade Commission (KFTC) is raising concerns over Korean Air’s possible monopoly in the domestic market if the acquisition is approved. The top antitrust watchdog claims the combination of two full-service carriers can infringe on free competition in the flight service market.
Top regulator Joh Sung-wook told lawmakers that the KFTC will try to conclude its review by the end of this year. But with the start of a phased return to normal next month, the KFTC is facing calls to speed up its review, because the airline industry is one of Korea’s key business sectors.
The acquisition proposal is subject to approval from countries or regions whose industries will be affected by the merger. Korean Air has sought relevant approvals however only Turkey, Taiwan, and Thailand have given the deal the green light, while China, the EU, Japan, the US, and Vietnam are still reviewing the plan.
This led Korean Air to postpone the acquisition of Asiana Airlines shares to December 31. If any of the remaining countries disapproves the deal, Korean Air will not be able to acquire Asiana.
State-run Korea Development Bank (KDB) is said to have asked the KFTC to take prompt action regarding the pending issue. The rationale is that the more time the antitrust watchdog takes to review the deal, the more time the airline industry will need to normalize operations when the phased return to normal or “living with COVID-19” plan kicks off.
“When the EU tried to regulate Amazon, Google and Facebook, the United States protected them. But Korean authorities are waiting for other countries to make the decision first before they do. It is regrettable that the KFTC is not showing enthusiasm here,” KDB Chairman Lee Dong-gull said.
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