The planned merger between Korean Air (KE, Seoul Incheon) and Asiana Airlines (OZ, Seoul Incheon) has passed another hurdle, with the UK's Competition and Markets Authority (CMA) approving it on March 1, 2023. The UK approval leaves Japan, the European Union (EU), and United States (US) as the only significant markets the merger is yet to receive the green light in.
Rather than imposing remedies or bans, s.73 of the UK's Enterprise Act (2002) allows the CMA to accept undertakings from parties that addresses the concerns raised and proposes solutions. In November 2022, after raising serious competition concerns about the proposed merger, the CMA asked Korean Air to submit undertakings.
"The CMA considers that the undertakings given below by Korean Air are appropriate to remedy, mitigate or prevent the substantial lessening of competition in relation to both scheduled air passenger transport services," said a March 1 statement from the agency.
Korean Air wants to buy a 63.88% stake in Asiana and merge the two airlines, in the process creating one of the biggest carriers in the world and dominating traffic on the UK - South Korea country pair. The merger is contingent on Korean Air not only securing permission to do so from the competition authority in South Korea, but in most major markets where it flies to.
Korean Air's undertakings to the CMA include surrendering seven slots per week at both Seoul Incheon and London Heathrow Airports to Virgin Atlantic (VS, London Heathrow). This framework agreement, which was signed on February 24, involves the CMA, Korean Air, Virgin Atlantic. That airline, the so-called remedy taker, will instantly enter into a codeshare relationship with Korean Air but also had to commit to utilizing those slots for three years and demonstrating the financial and operational capabilities to do so. Virgin Atlantic is also forbidden from transferring, assigning, selling, swapping those slots during the three-year period. The valid is valid for both cargo and passenger flights.
"The CMA’s approval is evidence that the proposed remedies submitted by the airline have resolved competition restriction concerns," a Korean Air statement reads. The airline adds that competition authorities in Türkiye, Taiwan, Thailand, Philippines, Malaysia, Viet Nam, South Korea, Singapore, Australia, and China have also all approved the merger.
Korean Air and Asiana are presently the only two operators on the UK - South Korean country pair. According to ch-aviation schedules data, Korean Air flies a daily roundtrip B777-300ER service plus a weekly roundtrip B747-8 freighter flight, while Asiana offers roundtrip A350-900 passenger flights six days a week. Over 7,600 seats a week are available on the country pair with the two Korean airlines evenly splitting the market between them. Virgin Atlantic has never operated on a scheduled basis to South Korea. That airline operates a fleet of A330-300s, A330-900Ns, A350-1000s, and B787-9s.
