The acquisition deal between Korean Air and Asiana Airlines is at risk due to concerns from the U.S. and European Union regarding reduced competition on specific cargo routes.
The US Department of Justice is exploring potential legal action to prevent a merger, citing concerns over the combined airline’s potential domination of passenger and cargo routes to the US that are currently competitive. This information was reported by Politico.
Both airlines provide service to San Francisco, Los Angeles, Seattle, New York City, and Honolulu.
Korean Air owns 23 freighters, which includes seven Boeing 747-8 and twelve 777 aircraft. It is the fifth-largest cargo carrier in the world based on volume, but the third when FedEx and UPS are not considered. Asiana has ten Boeing 747 freighters and one 767, according to Flightradar24.
Related: EU Warns Korean Air Over $1.4 Billion Asiana Deal
According to three sources familiar with the discussions cited by Politico, the Biden administration is worried that the merger would give one company too much power over the transportation of crucial goods such as microchips, potentially damaging the resiliency of the supply chain.
The European Union’s antitrust regulator has expressed concerns over Korean Air’s potential acquisition of South Korea’s second-largest airline, citing potential reductions in passenger and cargo competition between Europe and South Korea. Korean Air had agreed to take a majority stake in Asiana in November 2020 following encouragement from the South Korean government.
