Korean Air’s merger with Asiana Airlines secures European approval, with the US DOJ review remaining as the final step for completion by the end of the year.

Korean Air officially announced that its merger with Asiana Airlines has received the final green light from the European Commission (EC), marking a significant milestone in the airline’s ambitious consolidation strategy. However, despite this crucial approval, the U.S. Department of Justice (DOJ) remains the last regulatory hurdle standing in the way of completing the merger. The carrier aims to overcome this challenge and finalize the deal by the end of the year.

European Commission Approval Paves the Way for Merger

The European Commission’s decision to approve the merger between Korea’s two largest airlines is a pivotal moment in the ongoing saga. According to Korean Air, it has fulfilled all the conditions set out by the EC to gain its approval, allowing the airline to proceed with the merger process. The Commission’s approval effectively removed its earlier concerns about potential anti-competitive effects, a move that significantly clears the path for the merger to progress in the European market.

The EC had initially approved the merger in February, but it stipulated that several conditions had to be met before the deal could move forward. These included the divestiture of certain routes and the launch of new services to mitigate any negative impact on competition. Korean Air has since complied with these stipulations, addressing the EC’s concerns.

One of the key conditions involved the transfer of four European routes previously operated by Asiana Airlines to T’Way Air, a low-cost carrier based in Korea. T’Way Air, which operates a fleet of Airbus A330-300 aircraft, has now commenced services on these routes, connecting Seoul Incheon International Airport (ICN) to major European cities including Barcelona El Prat Airport (BCN), Frankfurt International Airport (FRA), Paris Charles de Gaulle Airport (CDG), and Rome Leonardo da Vinci Fiumicino Airport (FCO). This move is designed to maintain competition on these vital routes while alleviating concerns about a reduction in services due to the merger.

T’Way Air, which previously operated a smaller fleet of narrow-body aircraft, has begun its expansion into the European market, with flight frequencies increasing to meet the growing demand for travel between South Korea and Europe. In August, the carrier began flights to Rome, followed by the launch of services to Barcelona and Paris in September, and to Frankfurt by October.

T’Way Air is set to further grow its network and fleet, having recently inked a deal with aircraft leasing company Avolon to acquire five Airbus A330-900s. The first three of these widebody aircraft are slated for delivery by 2026, supporting the airline’s expansion.

Korean Air’s Support for T’Way Air and Air Incheon

Under the terms of the merger, Korean Air has pledged to assist T’Way Air in launching its new operations across Europe. This includes providing essential services such as aircraft, flight crew, and maintenance, which are necessary to ensure the success of T’Way Air’s expansion into the European market. This strategic support is designed to help T’Way Air quickly scale up its operations and meet the market demand while the airline establishes itself in this competitive space.

At the same time, Air Incheon, a cargo carrier based in Seoul, will take over the freight operations previously handled by Asiana Airlines. Air Incheon, which currently operates a fleet of four Boeing 737-800 converted freighters, will take over Asiana Cargo’s assets, including its fleet of Boeing 747-400 freighters. As part of the agreement, Air Incheon will also inherit Asiana Cargo’s slots, traffic rights, flight crew, customer contracts, and other essential assets, ensuring the continued operation of Asiana Cargo’s services under new ownership.

Asiana Cargo’s fleet included 12 Boeing 747-400 freighters along with one Boeing 767 freighter. The divestment of Asiana Cargo’s assets was one of the key conditions for the merger’s approval by the European Commission. This arrangement ensures that the competitive balance in the cargo market remains intact while facilitating the transition of these operations to Air Incheon.

The U.S. DOJ’s Role in the Merger

While the European Commission’s approval has been secured, the merger still faces scrutiny from the U.S. Department of Justice. The DOJ has raised concerns that the merger could harm competition on flights between South Korea and the United States. In particular, the DOJ has expressed fears that the merger could lead to reduced competition and higher prices on these high-demand routes, which are critical for both passengers and cargo.

Korean Air has already submitted the EC’s final approval to the DOJ for review, hoping that it will be able to resolve any concerns and finalize the merger by the end of 2024. If the DOJ approves the merger, it will be the final step in completing the deal, which was first initiated by Korean Air in 2020.

Reports earlier in 2023 suggested that the DOJ might challenge the merger, fearing that the combined entity could dominate the market between South Korea and the U.S., potentially leading to less choice for consumers. In particular, concerns were raised about the impact on routes between Seoul and U.S. cities, including New York, Los Angeles, San Francisco, and Chicago, where both Korean Air and Asiana Airlines operate substantial services.

Despite these concerns, Korean Air remains optimistic that the merger will ultimately benefit both consumers and the airline industry as a whole. By pooling resources, the two airlines will be able to compete more effectively with major global carriers, particularly those from the U.S. and Europe, while maintaining a strong presence in the competitive South Korean market.

The U.S. Market: A Crucial Battleground

Korean Air and Asiana Airlines hold a commanding position in the market between South Korea and the U.S., controlling over 60% of the total capacity on this route. Most of their operations concentrate on major routes linking Seoul-Incheon with top U.S.

Most of their services are centered around busy routes connecting Seoul-Incheon to key U.S. The majority of their flights are centered around busy routes between Seoul-Incheon and prominent U.S.
Destinations like Los Angeles, New York, and San Francisco.

According to aviation analytics company Cirium, in November 2024, Korean Air and Asiana Airlines together scheduled 47,329 weekly seats on U.S.-bound flights from Seoul-Incheon. This represents over 62% of the total 76,238 weekly seats between Seoul and the U.S. Meanwhile, Korean Air’s alliance partner, Delta Air Lines, which is part of the SkyTeam alliance, contributes an additional 10,318 weekly seats. Together, the three carriers control nearly 75.6% of the market share on these routes.

As the surviving entity in the merger, Korean Air will hold an even stronger position on these routes, which are some of the busiest and most lucrative in the world. If the DOJ clears the merger, Korean Air will have the opportunity to expand its reach further and consolidate its position as one of the world’s leading airlines.

With European approval in hand, Korean Air is making significant strides toward completing its merger with Asiana Airlines. However, the final approval from the U.S. Department of Justice is still pending. If the DOJ grants its approval, the merger will create a formidable airline group with a dominant position in both the passenger and cargo markets. The outcome of this regulatory review will be closely watched by the aviation industry, as it could set important precedents for future airline mergers and the dynamics of international air travel.