FTC CONDITIONALLY APPROVES MERGER

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The Fair Trade Commission has approved a merger between Korean Air and Asiana Airlines. However, the deal must be carried out under certain preconditions, as the merger will result in a gigantic airline carrier.

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The Incheon-LA route used to be highly competitive because it has the most passengers among flights between Korea and the U.S. Once Korean Air and Asiana Airlines merge, they will hold a monopoly over the route. The new air carrier will also dominate over 10 other routes, including between Incheon and New York. Its share will surpass 60 percent in 16 routes including the Incheon-Rome route. The FTC says the combined airline will also have an unrivaled presence in 14 domestic routes. Concerns are rising that the merger could have negative side effects. The FTC has approved the deal with certain conditions. If low-cost carriers or overseas airlines decide to conduct flights on 26 international routes where the merged airline's share exceeds 60 percent, it will be required to forgo its right to use airports at certain time slots. If a new airline enters the designated routes or an existing carrier decides to expand its flights there, the merged airline must also return its traffic rights. The measure will stay in effect for ten years after the merger. The combined carrier will also be mandated to restrict its airfares while maintaining service quality. The increase in airfares must not surpass the inflation rate compared to pre-pandemic levels. As to frequent flyer miles, the same benefits must be offered as in late 2019.

[Soundbite] Joh Sung-wook(FTC Chairperson) : "Special measures are needed to prevent consumer damage until new air carriers come along to resolve the lack of competition."

Given the ongoing stagnation in the aviation industry, the FTC has permitted the merged airline to determine its airfares later. It also did not impose any restrictions on freight. Korean Air says it accepts the FTC's decision.