Japan Fair Trade Commission Approves Yangsa Corporate Merger
Announcement Ahead of EU Contrary to Expectations
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Japanese competition authorities have approved the corporate merger between Korean Air and Asiana Airlines. Although it was initially expected that Japan would make a decision only after the European Union (EU) and the United States reached conclusions, Japan unexpectedly became the first among the three countries to finalize the approval.
Korean Air announced on the 31st that it had obtained corporate merger approval related to the acquisition of Asiana Airlines from the Japan Fair Trade Commission (JFTC). With this, Korean Air has completed approvals in 12 out of the 14 countries requiring merger approval, excluding the United States and the European Union (EU).
Earlier, in January 2021, Korean Air submitted explanatory materials to the Japanese competition authorities and conducted economic analysis and market research, followed by submitting a draft notification in August of the same year. Since then, it has been continuously consulting in advance on various corrective measures.
During this process, the JFTC expressed concerns about competition restrictions due to increased market share on Korea-Japan routes if Korean Air, Asiana Airlines, Jin Air, Air Busan, and Air Seoul were merged, and requested related corrective measures.
Accordingly, Korean Air excluded 5 out of 12 Korea-Japan passenger routes where the airlines’ operations overlapped and where there were no competition concerns. These include the Seoul-Tokyo/Okinawa routes and the Busan-Tokyo/Okinawa/Nagoya routes.
Furthermore, for four Seoul routes (Seoul?Osaka, Sapporo, Nagoya, Fukuoka) and three Busan routes (Busan?Osaka, Sapporo, Fukuoka), Korean Air agreed to partially transfer slots to domestic low-cost carriers (LCCs) and other entrant airlines upon their request to operate on these segments.
Japanese competition authorities also expressed concerns about competition restrictions on Korea-Japan cargo routes. However, due to the decision to sell Asiana Airlines’ cargo aircraft business division, they did not require any additional corrective measures except for the conclusion of a cargo supply usage agreement (BSA) for certain Japan-to-Korea routes. The sale of Asiana Airlines’ cargo aircraft business division will proceed after obtaining approvals from all remaining competition authorities and after Asiana Airlines is incorporated as a subsidiary.
Korean Air views the Japanese competition authority’s approval as more significant than approvals from other essential reporting countries. A Korean Air official stated, "Japan is geographically the closest country to South Korea and is a nation fiercely competing for the status of a Northeast Asia hub airport. Since even the Japanese competition authorities, who are involved in such a sensitive matter, have approved the merger, we expect Japan’s approval to have a positive influence on the pending approval decisions from the United States and the EU."
Within the industry, there was surprise at how quickly the Japanese authorities made their decision. It was expected that Japan would act only after the European Commission (EC) made its decision in early next month and after the U.S. competition authorities completed their approval process. An aviation industry official said, "Although there is no need for bilateral traffic rights cooperation between countries, it was quite surprising that Japan, which tends to be quiet and follow the U.S. stance, reached a conclusion first. However, since U.S. competition authorities strictly handle monopolies, it may be difficult to reach a final conclusion soon."
Korean Air Maintenance Headquarters technicians Jeongtae Lee and Donggeun Yoo are inspecting a Boeing 777-300ER aircraft on the 26th at the Korean Air aircraft maintenance hangar in Jung-gu, Incheon, to achieve the important value of safe aircraft operation. Photo by Jinhyung Kang aymsdream@
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