DALLAS — The United Kingdom’s Competition and Markets Authority (CMA) is looking at the revised plan by Korean Air (KE) over its proposed merger with Asiana Airlines (OZ).
On November 28, the CMA announced that “there are reasonable grounds” that a modified merger plan “might be accepted.” This paves the way for eventual approval.
While the CMA accepted the newly revised plans for the merger of KE and OZ, it will listen to officials in the aviation industry before making a final decision. This comes as the CMA suspended the review of the merger in mid-November and asked Korea to address conferences over a monopoly on the Seoul-London route.
The CMA has until the end of January to announce its final decision. This announcement gives KE some breathing room, as the CMA raised concerns about the merger’s impact on the route between London Heathrow Airport (LHR) and Seoul-Incheon International Airport (ICN).
Of Mergers and Monopolies
The only two carriers operating between London and Seoul are KE and OZ. A merger between the two carriers would mean there would be no competition on the route. The fear is that a monopoly on the route would lead to higher fare prices and effects on cargo operations.
The CMA stated that the demand for the Seoul-London route has decreased, but in a few years is scheduled to surpass 150,000 travelers which is the number of passengers in 2019. The merger will undermine other airlines considering routes between the two cities.
Two years ago, KE announced plans to acquire fellow Korean carrier OZ. This came just as the fallout from the coronavirus caused many carriers to file for bankruptcy.
KE has passed reviews from competition regulators in nine countries, including Taiwan, Thailand, Korea, and Vietnam, where it is mandatory to report. The carrier also passed reviews in optional reporting countries including the Philippines, Australia, Singapore, and Malaysia.
The United States has decided to conduct regulatory reviews regarding the merger.
Although the merger has gotten regulatory approval from many countries, it has not yet been approved by key markets such as the European Union, China, and the United States. Even though the approval process has been slower than anticipated, KE says that it is still on track.
Featured image: the merger between the two South Korean carriers was announced in November 2020. Photo: Hyeonwoo Noh, CC BY-SA 4.0, via Wikimedia Commons