12-Mar-2010 10:59 AM

Korean Air and Asiana Airlines fined for anti-competitive action against startups/LCCs

South Korea’s Fair Trade Commission fined Korean Air and Asiana Airlines a combined KRW11 billion (USD9.8 million) for anticompetitive actions against start-up LCCs (Bloomberg/Korea Herald/Joongang Daily, 11-Mar-2010). According to the Commission, Korean Air and Asiana told travel agents they would be allocated fewer seats during the peak season if the agencies also sold tickets on LCCs. Korean Air was fined KRW10.4 billion (USD9.2 million), while Asiana was fined KRW640 million (USD565,000). Jeju Air, Hansung Airlines and Yeongnam Air, in addition to some international carriers, were targetted by the two carriers' actions, according to the Commission. Jeju Air expressed hope that the decision will mark the beginning of a “more transparent airline industry through free and fair competition.”

Fair Trade Commission: “For travel agencies, securing enough tickets for popular routes during the peak season can determine how many customers they can get. As a result, low-cost carriers had great difficulty selling tickets for major international routes for Japan, Southeast Asia and Hawaii and domestic routes to Jeju... The inability to sell airline tickets through travel agencies caused great difficulty in [the budget carriers’s] operations and made it hard for them to settle into the market. The airline transportation industry requires massive investment at the initial stage to secure aircraft and other infrastructure. If they fail to safely settle in the market, new companies are likely to collapse because of the massive initial spending,” Company Statement. Source: Joongang Daily, 11-Mar-2010.

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