Korean Air merger doesn’t affect cargo competition

By Rebecca Jeffrey

Photo: Korean Air

Korean Air’s acquisition of Asiana Airlines will not reduce cargo competition, the Competition and Consumer Commission of Singapore (CCCS) has concluded.

The CCCS has given Korean Air unconditional approval for its takeover of Asiana Airlines on February 8, ruling that the acquisition will not infringe Singapore’s 2004 Competition Act.

Singapore’s competition authority conducted a public consultation in July last year to seek feedback from more than 150 stakeholders, including aviation regulatory bodies, competitors and customers, on Korean Air’s business combination report.

According to a Korean Air press release: “In the cargo business, the authority also concluded that the merger would not reduce competition due to the significant pressure from existing and potential competitors such as Singapore Airlines and providers of indirect cargo flights, as well as excess capacity.”

The CCCS also found that the “merged entity is unlikely to raise ticket prices due to the high degree of competition from competitor airlines such as Singapore Airlines in the passenger business”.

Since the airline submitted business combination reports to nine countries that require reporting in January 2021, Korean Air has received approval from Turkey, Taiwan and Vietnam. The Thailand Competition Commission announced that the submission of a business combination report was not necessary.

From countries where reporting is arbitrary, Korean Air has also received clearance from Malaysia in addition to Singapore. The Philippines has confirmed that the business combination report was not necessary.

Korean Air said in order to finalise the acquisition as soon as possible, it will continue to proactively communicate and cooperate with the remaining regulatory bodies where the report is required, including the US, the European Union, China and Japan, as well as the UK and Australia, where reporting is arbitrary.

Seoul-headquartered Korean Air’s network extends across 120 cities in 43 countries. The company’s freighter fleet includes four Boeing 747-400s, seven Boeing 747-8Fs and 12 Boeing 777Fs. In 2020, it handled 1,599,000 tons of cargo internationally and 36,000 tons domestically.

Asiana Airlines’ international cargo business covers 12 countries, 27 cities and 25 routes. Last year, the company modified two Airbus A350-900 passenger jets for freighter operations as part of plans to grow its cargo business.

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