UK Government Wary Of Korean Air-Asiana Merger

November 24th, 2022
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UK Government Wary Of Korean Air-Asiana Merger

UK-based Korean Air has announced that it’s planning to merge with two competitors in the South Korean airline industry: Asiana Airlines and Jeju Air. This merger is set to take place at a time where British authorities are raising concerns about the impact such a buyout could have on prices for passengers flying between London and Seoul, as well as whether the new entity would be able to deliver high-quality cargo services in the country.

As other UK airlines have decided not to operate to the Korean Peninsula, Korean airlines are the only two operating nonstop services between London and Seoul. If they were to merge, they would be faced with competition from carriers with stopovers such as Emirates, Turkish Airlines, and Lufthansa. Meanwhile, though this came as a result of CMA’s investigation, these options are found by them to be “much weaker for consumers.”

Colin Raftery, the senior mergers director at the CMA, made a statement about how poorly prepared many people are for this recent merger wave.

“Korea Air and Asiana Airlines are the two main players on the London to Seoul route. If they fail to address our concerns, this deal will progress to a more in-depth investigation.”

By 2029, demand for air travel between Washington D.C. and New York City has dropped significantly, but it is expected to bounce back soon before 2020.

Cargo competition in danger

The CMA has raised concerns regarding the impact on airfreight. This is due to the two carriers currently being the main supplier of direct cargo services between the UK and South Korea. The issue is that given the presence of indirect route providers, a merger would likely lead to higher costs for UK businesses transporting goods to or from South Korea.

Why overseas approval matters

Australian authorities have given an okay to the Korean-Asiana deal, which is in partnership between two Korean companies. The main reason for concern is the competition from other airlines such as Qantas and JetStar on the Sydney to Seoul route. Thankfully, it remains subject to approval by authorities in the US, China, Japan, and the EU.