[Reporter’s Notebook] The Aftermath of the Korean Air?Asiana Merger Has Already Begun

Fare Increases and Service Reductions Already Attempted
Mileage Usage Steered Toward Domestic Routes
Regulation Alone Is Not Enough... Competitors Are Needed

The aftermath of the merger between Korean Air and Asiana Airlines is unfolding faster than expected. They have attempted to reduce services or raise fares immediately after paying the acquisition price and incorporating Asiana as a subsidiary. It seems that the concerns about Korean Air's monopoly are materializing even before the ink has dried.

On the 9th, Korean Air announced that it would sell emergency exit seats with more space and the front row seats of the economy class, which are convenient for boarding and disembarking, for a fee on domestic flights. This fare increase plan was effectively announced less than a week after finalizing the acquisition of Asiana Airlines earlier this month. Korean Air explained, "We have been selling these seats for a fee on international flights since 2021, and this pricing policy is commonly applied by foreign airlines such as Lufthansa," but withdrew the decision three days later amid a wave of criticism.

Asiana Airlines also abruptly stopped providing access to the Incheon International Airport business lounge for customers seated in the ‘Economy Smartium’ class, which is a tier between economy and business class, earlier this month after the merger was decided. Facing consumer protests and public criticism, they reversed the decision on the 20th and maintained the benefit. The earlier notice about the benefit suspension was completely deleted.

There are also signs that they are hastily trying to use up mileage, which is a kind of liability. Asiana Airlines announced that it would hold the ‘Jeju Happy Mileage Week’ event three times on the 26th of last month, and on the 9th and 23rd of this month, just three days before the European Commission (EC) announced the merger of Korean Air and Asiana Airlines. Through this, they planned to supply a total of 24,000 mileage seats on the Gimpo-Jeju route. Asiana Airlines, which has been consistently criticized for a shortage of mileage seats on international flights, suddenly concentrated mileage seats on the relatively less profitable domestic routes.

Service changes or reductions that may be unfavorable to customers have been pouring out from the first month after the merger decision. Although everyone expected this situation, it has appeared faster than anticipated, leaving customers bewildered. However, it is difficult to unilaterally pressure corporate activities by relying solely on critical public opinion every time. ‘Pinpoint regulation,’ where authorities decide on each service, is also not in line with global trends. It may only increase effort and cause more noise.

Ultimately, the way to check this is to increase customer choices and induce competition. Unless companies are made to fear customer attrition, they will find it hard to resist the temptation to cut costs and raise fares. We need to nurture domestic small and medium-sized airlines operating long-haul flights, such as Air Premia and T’way Air, which have stepped forward as alternatives while encouraging service improvements from foreign airlines that have been relatively outside regulatory control because they are overseas companies. This is the direction we must take, even if it takes time. Otherwise, customers will have no choice but to agree to the densely written terms set by the only large domestic airline.