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(LEAD) S. Korean regulator gives conditional approval to Korean Air-Asiana merger

All News 15:46 February 22, 2022

(ATTN: UPDATES with more details in paras 6, 8, 9, 16; ADDS photo)

SEOUL, Feb. 22 (Yonhap) -- South Korea's antitrust regulator said Tuesday it has decided to conditionally approve a deal by Korean Air Lines Co., the country's biggest carrier, to buy the debt-ridden Asiana Airlines Inc.

The Fair Trade Commission (FTC)'s decision does not complete Korean Air's proposed takeover of the country's No. 2 carrier as antitrust regulators in major countries, including the United States, are still reviewing the deal.

Since January last year, the FTC has been reviewing Korean Air's deal to buy a 63.88 percent stake in Asiana Airlines. The deal, valued at some 1.8 trillion won (US$1.5 billion), was inked in November 2020.

The regulator said it has decided to give conditional approval to the deal as it determined the combination of the two airlines could hamper competition on a significant number of flight routes.

The FTC said the two carriers' merger could hurt competition on 26 international and 14 domestic routes among the 87 overlapping routes that they've been operating.

As conditions for the approval designed to ease monopoly concerns, the FTC requested the two full-service carriers return some take-off or landing slots at airports and readjust flight licenses in 26 international and eight domestic routes over the next 10 years if other airlines seek to operate on those routes.

The regulator also said the two airlines will be restricted from hiking flight fares and banned from reducing the number of flight seats or the supply of services until they implement the corrective measures.

They should not also change their mileage systems in a way that could put their customers at more disadvantage. The carriers need to submit details about new mileage policy to the FTC within six months after their combination is completed.

This undated file photo shows airplanes of Korean Air Lines Co. and Asiana Airlines Inc. at Incheon International Airport, the main gateway of South Korea. (Yonhap)

This undated file photo shows airplanes of Korean Air Lines Co. and Asiana Airlines Inc. at Incheon International Airport, the main gateway of South Korea. (Yonhap)

The FTC said the latest move will help low-cost carriers enter the long-haul flight market that has been dominated by Korean Air and Asiana here.

"The decision will help ease business uncertainty in the airline industry and prevent consumers from suffering damage due to the combination. It is expected to set the tone for competition to be maintained or spurred in the airline sector," FTC chief Joh Sung-wook told a press briefing.

The approval is expected to help reshape the country's airline sector that has been reeling from the fallout of the COVID-19 pandemic.

But critics said the conditions put forward by the FTC still appear insufficient to address monopoly concerns in the country's airline industry.

In January last year, Korean Air asked antitrust regulators of 14 other countries, including the U.S., the European Union and China, for the review of its combination with Asiana.

The company has received approval from eight countries so far, including Singapore, Turkey and Vietnam.

The FTC said it plans to hold a deliberation session to potentially add more measures that the two carriers may have to take, depending on the results of reviews by foreign regulators.

"We accept the FTC's decision and will do our best to win approvals from other regulatory authorities," Korean Air said in a statement.

If the takeover is completed, Korean Air, currently the world's 18th-largest carrier by fleet, is expected to become the world's 10th-biggest airline.

Korean Air earlier said it aims to launch a combined entity with Asiana in 2024 after completing a takeover process by next year.

Joh Sung-wook, chief of the Fair Trade Commission, holds a press briefing in the administrative city of Sejong on Feb. 22, 2022, over the regulator's decision to give conditional approval to the Korean Air-Asiana merger. (Yonhap)

Joh Sung-wook, chief of the Fair Trade Commission, holds a press briefing in the administrative city of Sejong on Feb. 22, 2022, over the regulator's decision to give conditional approval to the Korean Air-Asiana merger. (Yonhap)

sooyeon@yna.co.kr
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