Singapore Gives OK to Korean Air-Asiana Airlines Merger, Challenges Ahead

Photo Credit: Joris Wendt/AviationSource

LONDON – Korean Air said on Wednesday it has received unconditional approval from the Competition and Consumer Commission of Singapore (CCCS) for its business combination with Asiana Airlines.

The deal still requires approvals from the Fair-Trade Commission and regulatory authorities in other countries.

According to Korean Air, the Competition and Consumer Commission of Singapore concluded that the air carrier’s acquisition of Asiana Airlines will not infringe Singapore’s Competition Act.

The decision comes after the CCCS conducted a public consultation last July to seek feedback from more than 150 stakeholders, including aviation regulatory bodies, competitors, and customers, on Korean Air’s business consolidation.

The CCCS found that the merged entity is unlikely to raise ticket prices due to the significant pressure from existing competitors such as Singapore Airlines.

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 and providers of indirect cargo flights, as well as excess capacity.

The South Korean antitrust regulator also deliberated Wednesday to decide whether or not to approve Korean Air’s Asiana takeover, with the final decision expected to be announced within a few days.

Photo Credit: Joris Wendt/AviationSource

The Fair-Trade Commission is expected to grant conditional approval.

It previously said it will approve the business consolidation of Korean Air and Asiana Airlines under the condition that they will have to give up some of their airport slots and transportation rights of certain regions, to prevent monopoly in the country’s airline industry.

Korean Air has already received approval from Turkey, Taiwan, Vietnam, and Malaysia.

Thailand Competition Commission and the Philippines announced that the submission of a business combination report was not necessary.

The airline will still need clearance from six other countries including the US, the EU, Japan, China, the UK, and Australia. 

The EU and China are the two biggest obstacles in the airline’s bid as the EU’s regulatory body has been getting tougher over business mergers and China continues to be very conservative in airport slots and transportation rights distribution.

Korean Air, if merged with Asiana Airlines, would become the world’s 10th-biggest airline with a combined fleet of over 230 active aircraft and 127 on order.

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