최경애
| 2023-06-19 07:00:05
(Yonhap interview) Korean Air's merger-monopoly issue
(Yonhap interview) Korean Air needs to address monopoly concerns over merger with Asiana: minister
By Choi Kyong-ae
SEOUL, June 19 (Yonhap) -- Korean Air Co. needs to address global antitrust regulators' monopoly concerns over the South Korean national flag carrier's planned merger with its smaller domestic rival Asiana Airlines Inc., the transport minister has said.
In 2021, Korean Air submitted documents to antitrust regulators in 14 countries for the review of its integration with Asiana Airlines.
The company has received approval from 11 countries, including Britain, Australia, Singapore, Vietnam, Turkey and China, and is awaiting a decision from Japan, the United States and the European Union.
Last month, the European Commission informed Korean Air of its preliminary review, in which it stated that its proposed acquisition of Asiana may restrict competition in the markets for passenger and cargo air transport services between the EU and South Korea.
A U.S. report said the Department of Justice (DOJ) was considering suing to block the two carriers' combination due to the same competition reasons. Korean Air said the DOJ has not made any official decision on the combination.
"To help global regulators wrap up their reviews of the planned merger as quickly as possible, Korean Air needs to responsibly come up with measures to resolve the (regulators') monopoly worries," Land, Infrastructure and Transport Minister Won Hee-ryong said in an interview with Yonhap News Agency on Friday.
On the government side, it has explained its efforts to prevent merged companies from wielding monopoly power in the markets to overseas regulators, the minister said.
"The government bans air carriers from raising passenger and cargo transportation charges by more than the country's inflation rate and keeps them from reducing the number of passenger seats. The carriers are also required to maintain their service quality," he said.
The EU is scheduled to make a decision on the Korean Air-Asiana merger by Aug. 3.
In the preliminary review, the European Commission said that Korean Air and Asiana compete head-to-head in carrying passengers and cargo between the European Economic Area (EEA) and South Korea. Together, they would be by far the largest carriers of passengers and cargo on these routes and the merger may remove an important alternative for customers.
"Other competitors face regulatory and other barriers to expanding their services and may be unlikely to exert sufficient competitive pressure on the merged entity. The merger may therefore lead to increased prices or decreased quality of passenger and air transport services," it said.
In response, Korean Air has said South Korea's two full-service carriers account for a combined 40 percent of passenger and cargo slots at Incheon International Airport, the country's main gateway, below the level that constitutes a monopoly.
The company is willing to make concessions to international regulators so the merger plan can go through, Korean Air Chairman and CEO Cho Won-tae told a foreign newswire at the annual general meeting of the International Air Transport Association (IATA) in Istanbul early this month.
"We are in this 100 percent. We will make it happen regardless of what we have to give up. I feel strongly. I'm going to push it all the way," Cho said.
Citing regulators in the U.S., EU and Japan, the CEO said they are asking for more competition. Korean Air has a "good solution" for it, and he is positive that he can convince them.
Mentioning travel demand, Minister Won said the country's passenger travel on international routes had recovered to 70.3 percent of the pre-pandemic levels in 2019 as of May this year.
Passenger travel on international routes, except for Greater China and Russia, had rebounded to more than 80 percent of the pre-pandemic levels at the end of May.
"Travel demand is expected to fully recover to the pre-pandemic levels in the first half of 2024 if domestic and foreign airlines' planned addition of new planes to their fleets and personnel recruitment go smoothly as planned," Won said.
IATA and the Airports Council International have forecast travel demand in the Asia-Pacific region will recover to pre-pandemic levels in 2024 due to China's late reopening of its borders in March.
As for Ukraine's post-war reconstruction projects, the minister said the Seoul government is considering forming a consortium with Poland, Germany and Japan to help Korean companies participate in the projects.
Ukraine's post-war rebuild focuses on establishing infrastructure for future development. Major economies, as well as global organizations that include the International Monetary Fund and the European Bank for Reconstruction and Development, have expressed their interest in the projects.
"We will build up a trusted partnership with Ukraine through official development assistance and public-private partnerships in the initial stage of post-war reconstruction," Won said.
Official development assistance is defined as government aid that promotes and specifically targets the economic development and welfare of developing countries. Public-private partnerships are a mechanism for the government to implement public infrastructure projects using the resources and expertise of the private sector.
(END)
[ⓒ K-VIBE. 무단전재-재배포 금지]