FOLLOW US

The European Commission has given its conditional nod on Tuesday for Korean Air Lines Co. Ltd.'s proposed acquisition of Asiana Airlines for $1.6 billion, following alterations aimed at assuaging competition worries.

Conditions Set by European Commission

The commission, in its statement, outlined that Korean Air had agreed to divest Asiana's global cargo business and open up competition from a low-cost carrier for passenger services to gain approval. However, the green light from the European Union is contingent upon Korean Air's complete adherence to the agreement concerning flight routes and divestment.

European Commission Approves Korean Air's Asiana Acquisition : Margrethe Vestager's Statement

Margrethe Vestager, the executive vice president of the European Commission, emphasized, "Korean Air committed to the divestment of Asiana's global cargo freighter business to a suitable purchaser; and to the divestment of assets to facilitate the entry of rival airline T'Way on key passenger routes."

European Commission Approves Korean Air's Asiana Acquisition : Concessions Made by Korean Air

Korean Air has pledged to provide assets necessary for low-cost South Korean airline T'Way Air Co. Ltd. to operate passenger routes between Seoul and major European cities. The commission stipulates that the merger won't proceed until T'Way commences operations on these routes.

Moreover, Korean Air undertook to offload Asiana's global cargo flight services business, with the approval hinging on finding a suitable buyer for this division.

Vestager's Views on Industry Importance

Vestager underscored the significance of the airline industry, stating, "The airline industry is crucial for connectivity and has a significant place in the economy of our member states."

Antitrust Investigation and Merger Notifications

The European Commission initiated an antitrust probe into the merger in February 2023, primarily over concerns about routes and potential competition issues between EU states and South Korea.

Korean Air revealed that it had filed merger notifications with 14 competition authorities since January 2021, with the Asiana deal still awaiting approval from the U.S. Federal Trade Commission.

Similar Agreement Over U.K. Flight Routes

This decision echoes a previous arrangement regarding U.K. flight routes. Last year, Korean Air inked a deal with Virgin Atlantic Airways Ltd. for the utilization of the London-Seoul route for both passenger and cargo flights.

Approval and Concerns Addressed

Initially, concerns were raised by the Competition and Markets Authority (CMA) about potential dominance on the London-Seoul route resulting from the deal. However, following reassurances, the CMA approved the terms of the $1.6 billion acquisition.

European Commission Approves Korean Air's Asiana Acquisition : About Korean Air

Korean Air stands as South Korea's largest airline, offering international passenger and cargo services. The company operates from its global hub at Incheon International Airport, servicing over 100 cities across approximately 40 countries.