Korean Air Chairman Reaffirms Determination for Asiana Airlines Merger, Slot Returns Likely to Expand
Chairman Cho Won-tae of the Hanjin Group has reiterated his unwavering commitment to the merger between Korean Air and Asiana Airlines in a recent interview with foreign media. Despite potential sacrifices, Chairman Cho expressed his determination to overcome regulatory obstacles and make the consolidation a reality. This article provides an overview of Chairman Cho’s remarks, the challenges faced by the merger, and the possible expansion of slot returns.
Since the initial announcement of the merger plans in 2020, Korean Air has secured approvals from 11 out of 14 key countries, including South Korea, the home country of both airlines. However, regulatory authorities in the United States, the European Union (EU), and Japan have raised concerns about the potential monopolistic nature of the merged entity. Such concerns stem from fears that the consolidation could hamper market competitiveness. The merger’s fate hangs in the balance as any refusal from countries currently conducting the merger review process could potentially derail the entire endeavor.
During an interview with Bloomberg TV in Istanbul, Chairman Cho emphasized the dedication and effort invested in the merger, stating, “We have dedicated our full efforts to this endeavor, and we will ensure the merger’s success, no matter what concessions we need to make.” While acknowledging the demands for increased competition voiced by the US, EU, and Japanese authorities, Chairman Cho expressed confidence in Korean Air’s ability to present viable solutions and persuade regulators to approve the merger.
One significant aspect under discussion is the notion of “sacrifice” mentioned by Chairman Cho. Industry insiders speculate that this may involve Korean Air returning certain routes and slots. Slots refer to specific time slots for takeoff and landing at congested airports. The voluntary return of seven slots at London Heathrow Airport to Virgin Atlantic Airways earlier this year demonstrates Korean Air’s willingness to address competition concerns. This strategic move aimed to alleviate worries raised by the UK’s competition authority (CMA) and pave the way for the merger. Additionally, Korean Air obtained approval from Chinese authorities by returning nine slots, further illustrating its commitment to addressing regulatory concerns.
While the specifics of the slot returns have not been disclosed, experts suggest that the willingness of Korean Air to provide concessions in the form of slot returns could play a pivotal role in securing regulatory approvals. These returns serve as a potential solution to allay concerns about market concentration and safeguard healthy competition within the aviation industry.
Chairman Cho’s resolute stance on completing the merger has been interpreted by observers within the business community as a testament to his unwavering determination. The successful merger of Korean Air and Asiana Airlines holds significant implications for the aviation industry, with stakeholders eagerly awaiting further developments.
The merger between Korean Air and Asiana Airlines stands as a significant milestone in the aviation industry. Chairman Cho Won-tae’s reaffirmed commitment and willingness to make necessary sacrifices underscore his determination to see the consolidation through, despite regulatory challenges. As Korean Air navigates the scrutiny of regulatory authorities in the US, EU, and Japan, the expansion of slot returns emerges as a potential solution to address concerns and gain necessary approvals. The outcome of this merger holds great importance for industry stakeholders and will shape the future landscape of the airline industry.
By Jungchan Lee/Korea Travel News