November 27, 2024

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(Korean Air)

Regarding the news that the US government might officially interfere with South Korean national carrier Korean Air's merger with its smaller domestic rival, Korean Air said that the US authorities have not told them of any official decisions, Friday.

According to the US news website Politico, the US Justice Department is considering a lawsuit against the Korean Air on the basis that the company's business integration with Asiana Airlines could result in a monopolization that could prevent new airlines from flying between the US and Korea.

The US authorities are further concerned about cargo traffic, the article said, with the merged entity feared to dominate the transportation of crucial goods.

Regarding the news, an official from Korean Air said via a statement that at the last meeting between Korean Air and the US Justice Department on May 12, the company has learned that the US authority has yet to take a position nor have a confirmed timeline regarding announcement of its approval.

"Korean Air and the US Justice Department will continue the dialogue until the final decision is made by the US Justice Department," she said, adding that the the merger will not hinder competition in the aviation industry for a slew of reasons -- including its decision to cooperate with Korea's Fair Trade Commission's measure to provide separate slots for airlines aiming to fly along routes that are at risk of becoming monopolized by the merged entity.

"The airline (Korean Air) fully complies with a robust and comprehensive set of remedies ordered by Korea's Fair Trade Commission. Korean Air will also reiterate its proactive commitment to the Korean government’s project to restructure Korea’s aviation market," she said.

Korean Air handed in documents to 14 countries for the go-ahead of its merger with Asiana in 2021, after signing a deal to acquire the controlling stake in Asiana for 1.8 trillion won ($1.3 billion) in 2020.

11 countries, including Britain, China and Australia, had approved the merger, and as of May, Korean Air is waiting for the green light from Japan, the European Union and the US.

According to the Korean Air official, while the EU will announce its decision on Aug. 3, the company sees that US has not yet set a timeline for its decision, and as for Japan, the company expects that Japan will be deciding whether to approve the merger or not based on the decisions that US and EU make.

If the US Justice Department decides to file a lawsuit, this will mark the first time that the US government has sued a foreign airline to thwart its merger.

Earlier in March, the US Justice Department sued JetBlue Airways, a US low-cost carrier, to block its proposed acquisition of Spirit Airlines worth $3.8 billion, with reasons that the M&A could reduce competition in the aviation industry.

The US Justice Department had also filed a lawsuit in 2021 to put a brake on JetBlue and American Airlines' alliance, amid efforts to boost competition.

By Lee Yoon-seo (yoonseo.3348@heraldcorp.com)