EU, 'Korean Air Merger' Domestic LCC Opinions Heard... "Flight Plans Confirmed"

[Image source=Yonhap News]

[Asia Economy Reporter Yoo Hyun-seok] It has been confirmed that the European Union (EU) competition authorities, currently conducting a corporate merger review of Korean Air and Asiana Airlines, have heard the opinions of domestic low-cost carriers (LCCs) regarding the merger of the two companies.

In response to Korean Air's claim that competition restrictions could be eased if domestic LCCs operate European routes, the EU competition authorities appear to have directly verified the LCCs' plans and feasibility for launching such routes.

According to the aviation industry on the 26th, the EU Executive Commission recently requested opinion statements from LCCs T'way Air and Air Premia regarding the merger of Korean Air and Asiana Airlines and has received their responses.

Korean Air has been conducting preliminary consultations with the EU since January last year. This process involves submitting requested materials to the competition authorities and negotiating remedial measures before the formal filing. Korean Air is believed to have proposed remedial measures such as the redistribution of domestic traffic rights and the entry of new foreign airlines.

The EU asked T'way Air and Air Premia about their financial capabilities, possession of large aircraft, ability to operate long-haul routes, and opinions on market changes after the merger. T'way Air mainly operates medium- and short-haul routes as an LCC. Considering that Air Premia is a newly established airline, the EU focused on verifying whether it has the financial resources and capability to operate long-haul routes in the future.

Both airlines reportedly responded to the EU that they plan to operate European routes if the merger between Korean Air and Asiana Airlines is approved. Although both airlines are currently facing financial difficulties due to the impact of COVID-19, they emphasized that they can overcome financial challenges through future capital increases and recovery in passenger demand.

T'way Air is expected to consider operating European routes such as Paris and Rome, while Air Premia is expected to consider Germany and London. Paris and Rome are popular European destinations preferred by LCCs due to their high demand for both business and tourism.

T'way Air is preparing to operate long-haul international flights by introducing three large aircraft, the A330-300. Since the A330-300 can operate flights up to Eastern Europe, additional aircraft capable of flying farther will need to be introduced for Western European operations.

Air Premia, having introduced the Boeing 787-9 capable of flying to Western Europe, is in a position to commence operations once preparations are complete. Last month, Air Premia secured traffic rights for the Incheon-Germany route from the Ministry of Land, Infrastructure and Transport. If Air Premia operates the Germany route, it is expected to alleviate the monopoly of Korean Air and Asiana Airlines.

Not only the EU but also competition authorities in the United States and Australia are demanding the entry of new airlines to Korean Air. As a result, it is reported that Chairman Cho Won-tae of Korean Air and other top executives have been visiting overseas locations such as the US and Europe to meet with officials involved in the corporate merger review.