Japan's Fair Trade Commission (JFTC) has approved the merger between Korean Air (KE, Seoul Incheon) and Asiana Airlines (OZ, Seoul Incheon). The news leaves anti-trust authorities in just two jurisdictions, the United States and the European Commission, still to green-light the deal. Korean Air calls the Japanese decision "a significant milestone."
The KRW1.8 trillion won (USD1.35 billion) merger would see Korean Air take a 63.9% stake in Asiana and fold the airline into its own operations. However, the merger was contingent on antitrust approval in 14 key markets the airline operates in, including Japan.
Korean Air has agreed to surrender some slots on seven routes if another airline wants to take them up. These slots are on the routes between Seoul Incheon and Osaka Kansai, Sapporo Chitose, Nagoya Chubu, and Fukuoka, as well as the Batumi - Osaka, Sapporo, and Fukuoka city pairs. Initially, the JFTC had raised concerns about competition on 12 city pairs but later reduced that to seven.
"The JFTC also raised competition concerns about the Korea-Japan cargo network," a Korean Air statement reads. "However, with the decision to divest Asiana's cargo business, the JFTC limited its request for the airline to enter into a cargo block space agreement on select routes from Japan to Korea. The divestiture of Asiana's cargo arm is subject to the approval of all remaining competition authorities and will occur after Asiana Airlines is incorporated as a subsidiary of Korean Air."
"The JFTC concluded that it could not establish that the transaction would substantially restrain competition in any particular fields of trade," the competition agency said in its statement on the matter.
Korean Air expects the European Commission to approve the merger within the next few weeks after it and Asiana agreed to make several significant concessions. Meanwhile, the US authorities are taking a tougher stance and may require the two airlines to make even more changes to their networks and operations.
