The national Fair Trade Commission has given the merger between Korean Air and Asiana Airlines its conditional approval. However, it is not the only antitrust agency that has a say in the matter. Given its track record of vetoing airline and shipbuilding mergers, could the European Union put a wrench in the plans of a Korean mega-carrier? The bloc is set to present its ruling within a month from now.

Revised merger plan under consideration

Just before the end of 2021, Korea's Fair Trade Commission (FTC) tentatively gave its conditional approval to the merger of the country's two largest airlines. It acknowledged that competition might decrease on specific routes and said that some airport slots might have to be returned when Korean Air acquires its compatriot competitor. It has also asked Korean Air to refrain from increasing ticket prices.

Meanwhile, the European Union is yet to announce the results of its review of the proposed deal. According to the Korea Economic Daily, the bloc is expected to reveal its decision by mid-February. Given the EU's previous track record, such as vetoing Air Canada's acquisition of Air Transat last year, there is a potential it could block the merger or attach more stringent conditions to an approval.

Late last week, the EU blocked a merger between the world's largest shipbuilders, Korea's Hyundai Heavy Industries and Daewoo Shipbuilding and Marine Engineering. However, as Korean Air and Asiana are relatively small players in global aviation, it does not necessarily mean the unfavorable ruling for Hyundai and Daewoo is an indication of the EU's forthcoming decision. The bloc has said it will take the FTC's ruling on a revised merger plan into consideration.

World's busiest airline route

While they may not be huge global players, Korean Air and Asiana Airlines traffic the world's busiest airline route of 2021. Last year, the route between Jeju (CJU) and Seoul Gimpo (GMP) had over 1.5 million seats, beating number two on the list, Hanoi (HAN) to Ho Chi Minh (SGN), with over half a million.

Korean Air announced it would acquire the debt-burdened Asiana Airlines in November 2020. The preferred timeline would be for the merger to be complete, forming a Korean mega-carrier (and the world's second-largest A380 fleet, although that won't last very long) in 2024.

Half-way there

Thus far, the deal has received approval from antitrust agencies of four of the countries where the two airlines have their main international routes - Taiwan, Thailand, Turkey, and Vietnam. Along with the European Union, the US, China, and Japan are still to submit their rulings on the acquisition.

Last year, the European Union rejected Air Canada's bid to take over Air Transat, Canada's third-largest carrier. The EU cited antitrust regulations, saying that since the two airlines operate 30 overlapping Canada - EU routes, it would create unfair conditions for European airlines.

What do you think the EU's decision will be? What type of conditions could it place on the merger? Leave a comment below and share your thoughts.