In November 2020 it was announced that Korean Air would acquire Asiana Airlines, meaning that Korea’s two largest airlines would become one, forming the world’s seventh largest airline. It looks like the merger is now delayed a bit, as the two airlines are facing some delays with regulatory approval.
In this post:
New timeline for Korean Air & Asiana merger
As reported by The Korea Times, Korean Air has just submitted its post-merger integration plan to Korea Development Bank, and it provides a new timeline for the merger:
- Korean Air will acquire Asiana by 2022
- Korean Air and Asiana will fully merge and integrate operations by 2024
As a point of comparison, previously the acquisition was supposed to be completed this year, and then a full integration was supposed to take place shortly thereafter, so this represents a roughly two year delay to the timeline.
Apparently the cause for the delay is that Korean Air is struggling with regulatory approval from antitrust authorities in several countries that the airline serves. The combined airline needs approval from at least four countries (excluding South Korea), but so far only one country has provided the required approval.
On top of that, there are still concerns about how the low cost carriers owned by the airlines will be integrated. These three airlines include Air Busan, Air Seoul, and Jin Air.
Korean Air A380 first class
The implications of a delayed merger
Airline mergers are rarely good for consumers, so for all practical purposes I’d consider this delay to be positive news:
- The two airlines will be competing with one another for longer, which should lead to lower fares
- Some people prefer Asiana to Korean Air, and those people can continue to enjoy the Asiana product
- Asiana and Korean Air both have pretty good frequent flyer programs, and the programs will remain separate longer
- Asiana may continue to remain in the Star Alliance for a bit longer, as it’s expected that the combined airline will be in SkyTeam
Now, in fairness, this is the toughest position the airline industry has ever been in, and it’s going to be years before international travel fully recovers. So while I do think the above is true, I also recognize that delaying this merger by a couple of years will only increase losses and slow down a recovery even further.
Asiana will continue to operate independently for a while longer
Bottom line
Korean Air’s takeover of Asiana has been delayed — the acquisition is now expected to happen next year, while a full merger isn’t expected until 2024. This comes as the two airlines are facing issues getting approval from authorities, and also as they figure out how to merge their low cost carriers.
I’ll be curious to see how this plays out…
What do you make of the delay of the Korean Air & Asiana merger?
What does this mean for flight quality? Does it seem like Asiana will give up since they don't likely have a future? Or will they fight to provide good quality?
I think OZ moving over to SkyTeam is a positive thing as Star Alliance has a huge lead on TPAC market share with UA, NH, OZ, BR and SQ being huge TPAC players (almost double the capacity of SkyTeam & oneworld). However, as others have pointed out, it would lead to a monopoly on major routes from ICN to the US, especially ICN-LAX and JFK (not to mention important markets like SEA, ORD, IAD, etc.). I wonder what DL & KE's plans are...
I wonder which alliance the combined airline will be part of. It works well that one is part of Skyteam and the other is part of one of the other groups.
@Ben Dover ha ha
Good. I've been loyal with Asiana Club for close to a decade now and the longer they stay in Star Alliance, the better. Once they merge and presumably SkyPass is the surviving program I'll probably abandon it and use Tokyo or Taipei for my transfers in Northeast Asia.
Please stop saying its going to be years before international travel recovers. It will not!
"Paid news commentators" (I know them personally) are they are told what narrative to hold...but yet smaller companies have a different agenda unfolding for the future. The DOW companies will fall inline once told.
Airline CEO's are all a mess, and will be scrambling soon to put their albeit reduced fleets back into the air. See AA.
Hotels...
Please stop saying its going to be years before international travel recovers. It will not!
"Paid news commentators" (I know them personally) are they are told what narrative to hold...but yet smaller companies have a different agenda unfolding for the future. The DOW companies will fall inline once told.
Airline CEO's are all a mess, and will be scrambling soon to put their albeit reduced fleets back into the air. See AA.
Hotels are being announced and heading towards being built, in the 1000s across the world, so someone knows something about future travel. London alone has over 100 hotels opening soon (see Exec travel blog), and dozens announced during 2020 into this year.
People are getting out and about, and are no longer hiding in inside their house, in fear. You've been traveling everywhere throughout this pandemic....
@ Jordan -- I'm curious, when do you think internationally travel will fully recover to 2019 levels? This year? Next year?
Just bribe Somchai, then he can afford another mia noi and KE-OZ get their approval from Thailand — as if mighty Siam would care for ‘antitrust’
good. please keep Asiana out of skyteam as long as feasible
I'd also like to know what this means for the FF program. OZ has been a great way to maintain Star Alliance Gold - only 40k miles needed over _two_ years. I'm about 100k miles from lifetime *G status on OZ. Will any miles transfer over? What about status (to the equivalent in Skyteam)?
KE-OZ applied approval from 8 countries: US EU Japan China Taiwan Vietnam Thailand and Turkey of which Turkey approved already. At least 4 of them (therefore 3 more) have to approve for the process. My understanding is that KE-OZ will continue operate as separate companies for those nations that wouldn't approve.
It is expected that all will eventually approve but likely conditionally. For instance, GMP-HND is split between two with 3 daily each which...
KE-OZ applied approval from 8 countries: US EU Japan China Taiwan Vietnam Thailand and Turkey of which Turkey approved already. At least 4 of them (therefore 3 more) have to approve for the process. My understanding is that KE-OZ will continue operate as separate companies for those nations that wouldn't approve.
It is expected that all will eventually approve but likely conditionally. For instance, GMP-HND is split between two with 3 daily each which Japan won't approve as is. It will divest some slots to Jeju air or in the worst case, to its own LCC. KE-OZ's trick has been using Jin air as a separate company. Even Korean government fully agrees that LCCs are a completely separate entity and didn't count it when discussing ICN slot portion or route monopoly. (ICN slot has been super precious until pandemic.) As mentioned here, there's no such thing as antitrust in Korea.
HA, AA or UA wouldn't increase capacity to ICN and just see how JV with 90+% would pan out in the next couple of years.
I forgot to mention ICN-JFK among the soon-to-be monopolized routes of KE-DL JV.
Only ICN-HNL(HA)/SFO(UA)/DFW(AA) will have some competition.
@Flyer, I agree. When OZ is merged to KE, the KE-DL JV will take up nearly 90% of direct flight PAX capacity between S. Korea and the US and monopolize most of the routes(ICN-LAX/SEA/ATL/BOS/ORD/LAS/MSP/IAD/DTW).
AA has recently reduced the number of free checked baggage and introduced basic economy class in transpacific route(of course without cutting the price) so I don't think it'll do any better than others.
@Ben Dover,
I don't think there's a Korean word for "antitrust"...
I do believe those 4 countries including Japan and China but can't figure out who are the rest 2 countries.
I am curious (and unsure whether you answered this in a previous post), but what would happen with your frequent flyer miles given a merger? For example, if I have 50,000 Asiana miles in my account and Asiana is being absorbed by Korean...do I now have 50,000 Korean miles?
For clarification, I don't have 50k sitting in my Asiana account but I do handful.
Is one of the 4 countries the US? This would eliminate nearly all competition on ICN routes and given KE has a JV with DL, this largely shuts UA out of the market. I wouldn’t be surprised if DoJ is concerned here. This is even more anticompetitive than what DL was doing with WestJet.