South Korea aviation: Korean Air makes important progress on Asiana merger approvals


Korean Air is moving closer to finalising its acquisition of Asiana Airlines this year, after taking some significant steps in Dec-2022 towards gaining the approvals it needs from foreign governments.

In an address to employees on 2-Jan-2023, Korean Air CEO Walter Cho described 2023 as a "pivotal year" for completing the Asiana takeover. "We are in the last stage[s] with the remaining overseas competition authorities [which are] reviewing the merger", he said.

South Korean authorities have approved the acquisition and measures offered to preserve competition, but Korean Air is still seeking clearances from several governments in countries served by both operators. The regulatory process in some countries has taken longer than expected. The lengthy nature of the reviews is likely a reflection of the size of the deal and the importance of the airlines in some markets.

The notable point is that Korean Air has been able to address authorities' competition concerns without diluting merger benefits , and it is likely to be able to do so in the remaining processes.

  • Korean Air is in the final stages of acquiring Asiana Airlines and aims to complete the takeover in 2023.
  • Chinese authorities have approved the merger, with the condition that the combined airline transfers slots to new entrants on nine specified routes.
  • Korean Air and Asiana Airlines held a significant share of the South Korea-China market before the pandemic, but faced strong competition from Chinese carriers.
  • The UK Competition and Markets Authority (CMA) has signaled its intention to approve the merger, subject to certain mitigation measures, including the ceding of slots to Virgin Atlantic or another airline.
  • Approvals are still needed from the US, EU, and Japan, which are important markets for Korean Air.
  • The merger between Korean Air and Asiana Airlines aims to preserve Asiana's workforce and operations, and create a stronger competitor in the global aviation industry.


  • Korean Air gained approval from China in Dec-2022, and tentative approval from UK.
  • The combined airline will offer slots to new entrants on nine China-South Korea routes.
  • Korean Air/Asiana held more than 40% of China-South Korea capacity before COVID-19.
  • The merged airlines will cede slots to Virgin Atlantic or another airline to satisfy UK regulators.
  • Competition authorities in the US, EU and Japanese markets have yet to grant approval.

Chinese authorities wanted to allow access for potential new entrants

There were positive developments for Korean Air in two jurisdictions in the final weeks of last year.

In the most recent move, China's Ministry of Commerce approved the Korean-Asiana merger on 26-Dec-2022.

The ministry required certain measures to mitigate potential harm to competition. The merged airline must transfer slots to airlines wishing to start services on nine specified routes operated by both Korean Air and Asiana.

Five of the nine routes were already included in the requirements of Korea's Fair Trade Commission. These five are between Seoul and Zhangjiajie, Xi'an and Shenzhen, and between Busan and Qingdao and Beijing.

Another four routes were added by Chinese authorities. These are between Seoul and Beijing, Shanghai, Changsha and Tianjin.

Korean Air said the Chinese approval would "play a positive role in the review process of the remaining competition authorities."

Korean Air and Asiana have a large combined share on China routes, but competition is strong

For the week of 2-Dec-2019, before the pandemic hit, Korean Air and Asiana held a combined 40.5% share of weekly seats between South Korea and China, according to data from CAPA and OAG.

Including their LCC subsidiaries Jin Air and Air Busan, the share was 44.3%.

South Korea to China: one-way seats (Jan-2019 - Jan-2023)

For the same week, the big three Chinese mainland airlines - Air China, China Eastern and China Southern - accounted for nearly 30% of weekly seats.

The remainder of the share comprised several smaller airlines from South Korea and China, including multiple LCCs. There was a total of 28 airlines from these two countries serving this market - so there was certainly no lack of competition.

Current market share is artificially skewed due to flight restrictions.

UK competition body signals that it will approve merger - with some slots ceded

There has also been considerable progress in the UK.

On 8-Dec-2022 authorities there indicated they intend to approve the merger. The UK Competition and Markets Authority (CMA) gave notice that it proposed to accept the mitigation measures offered by Korean Air, subject to a final consultation.

This avoids the need for a deeper second-phase investigation, which likely would have drawn the process out much longer.

The CMA had previously expressed concerns about the effect of the merger on competition in the UK-South Korea market. To address this, Korean Air offered to make London and Seoul slots available to Virgin Atlantic or another airline, so that they can enter this market.

South Korea to UK: one-way seats (Jan-2019 - Jan-2023)

Before the pandemic Korean Air, Asiana and British Airways flew between the UK and South Korea. British Airways has not yet resumed flying to South Korea, and operations on this route have been complicated by the need to avoid Russian airspace.

Approvals are still needed in some of Korean Air's key markets

Korean Air sent its applications for approval to several countries in Jan-2021. This included nine jurisdictions where such reporting is mandatory.

Approval has been granted by China, South Korea, Turkey, Taiwan and Vietnam. Thailand confirmed that approval was not required.

Three other jurisdictions have yet to issue approvals - the US, EU and Japan, which are all important markets for Korean Air. The airline has been working with US authorities to assuage competition concerns.

In addition, Korean Air sent reports on its proposed merger to countries where such submissions are voluntary. Of these, Singapore, Malaysia and Australia have given clearance for the merger, with the UK's final decision still pending (see above).

Australia's Competition and Consumer Commission (ACCC) noted in its Sept-2022 ruling that the entry of Qantas and Jetstar onto South Korean routes late in 2022 helped ensure competition in this market.

Singapore's Competition and Consumer Commission said the merged airlines would still face a high degree of competition from Singapore Airlines on direct routes to Singapore, and from others on indirect routes.

Hard work still to come on merger execution after approvals gained

The merger between Korean Air and Asiana was initially proposed in Nov-2020 as a way to preserve Asiana's workforce and operations.

Asiana was already financially struggling before the pandemic, and then a prospective purchase deal fell through. The Korean government supported Korean Air's acquisition proposal, as it appeared to be the best option for Asiana.

A combined Korean Air and Asiana is expected to become one of the top-10 international airlines, allowing Korean Air to compete more effectively with the other global giants. However, the various national authorities are focused on what the result will be in their own markets, and in many cases they are anxious to ensure that there is sufficient competition for the merged airline. It appears that Korean Air is generally succeeding in addressing such concerns.

Completing all the regulatory processes will allow Korean Air to finally close the acquisition, which will presumably occur this year.

But then it will be faced with the even larger multi-year challenge of absorbing the Asiana operation.

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